Friday, August 27, 2010

Do We Know How to Present Information/Data?

I recently adopted a new wallpaper for my computer. Here it is:

(Edward Tufte gets real)

Edward Tufte is a hero of mine. I know that I will be soon seeing endless PowerPoint presentations being screened in the lecture rooms of the university. For what purpose, I wonder? That's why I'm with Edward on this. We aren't very good at this.

Tufte's book The Visual Display of Quantitative Information ought to be required reading for every graduate student. It contains what I am certain is the best graphic display of complex information I have ever seen--Minard's map of Napoleon's march on Moscow in 1812


Napoleon started with over 440,000 men on the left; at Moscow he had 100,000; and by the time he arrived back he had only 10,000. The map plots numbers, the course of the invasion, rivers, cities, temperature and time. (You can find out more here.) If Minard could produce such an elegant and fascinating visualization in 1869, we have to wonder why the kitten population isn't thriving instead of being decimated.

 (gratuitous picture of kittens)

Every time I read a draft of a PhD dissertation I come across graphics that float alone on the page, disconnected from text, idea or analysis. What the hell are they doing? Very, very rarely are these things self-explanatory. My response is automatic: read Tufte and don't come back until you have. It sometimes works.

I think I have found a worthy accompanist to Tufte in the guise of David McCandless, a British journalist, turned data visualizer. McCandless believes passionately that information is beautiful if you present it in the right way. He spoke at TED this year. And I am going to show his talk to my research methods students. McCandless has a way of taking vast amounts of information from sources such as Facebook and military budgets and putting them into a visual context that makes immediate and intuitive sense.

Watch....


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Friday, August 20, 2010

What Optima Really Did Wrong and Why It Was Sanctioned by the SRA

 (Thanks to BusinessAttorney)
The Lawyer published a more detailed analysis of where Optima Legal Services (see here 1 and here 2) went wrong when it jumped into bed with Capita.

The SRA accused Optima of not having an arms-length relationship with outsourcer Capita and therefore had become an Alternative Business Structure (ABS). According to the Lawyer:
Optima was established in May 2006 when Capita supplied the financial backing for the OLS directors to buy the volume property arm of DLA Piper. Over the next three years Capita lent the firm in excess of £35m, enabling it to make a series of acquisitions, including ­Pathway, the volume legal property services division of Walker Morris in September 2006, and Dickinson Dees’ volume arm D3 Legal in November 2009.
Furthermore
The SRA found that ­Capita did indeed have too much control over Optima. Its loan facil­ity was too ­”onerous” on the firm and OLS’s “extensive” reporting obligations to Capita were in “excess of a normal commercial lender arrangement”. The regulator also found that five of the nine managers on the firm’s operational board, including former chief ­executive Adrian Lamb, were paid by Capita.
 So any investor must now wait, patiently, for October 2011 before they start pumping money into legal practices. Despite this brouhaha Capita
has given no indication it is about to back away from the profession. In a statement released to The Lawyer last week, it acknowledged it went further than the rules allowed but added: “Optima continues to be a business in which we’re happy to invest.”
Finally, Neil Rose, at the LegalFutures website discusses the warning shots made by the Council of the Bars of Europe (CCBE) about the threat of ABS. The CCBE, along with the ABA, perhaps, is saying that the issue could end up in the European Court and
the CCBE’s argument centres around article 11 of the Lawyers Rights of Establishment Directive, which stipulates that member states have the power to ban from their jurisdictions any law firm that is not completely lawyer-run, if it were deemed contrary to public policy to allow them to operate.
 If it does end up in the European Court then it won't bode well for ABS. The ECJ has typically taken a national pro-profession line rather than a pan-European one when it comes to the legal profession. It appears that the ECJ has a knee-jerk reaction to these moves as the Wouters and Arduino decisions clearly demonstrate. For a good analysis of this see Richard Parnham's discussion at Jotwell.com.

It's certainly not going to be plain sailing into the new dawn. There will be the occasional nightmare or siren call along the way to ruffle the waters.
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Tuesday, August 17, 2010

Back to Buffalo with a New Paper

Back in April 2010 I attended a workshop at the University of Buffalo School of Law on ethics in practice. The aim of the workshop was
How do lawyers resolve ethical problems in the everyday context of law practice? What issues commonly emerge in different practice specialties and what are the norms and rules for resolving them? This is the first conference that focuses on the empirical research on lawyers' work and their actual decision making in a wide variety of practice contexts. Participants will examine the work of lawyers in a number of practice areas, identifying one or more ethical issues that arise in the practice area. Scholars will present their research, embedding lawyers' decision making in both the professional world of ethical codes and the social and economic setting of the workplace.
Lynn Mather and Leslie Levin are editing a book for the University of Chicago Press and this week was the deadline for the contributors'  chapters.

I have now put a version of mine, "Transnational Lawyering: Clients, Ethics and Regulation" on SSRN for immediate download. Any comments would be most welcome.
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Monday, August 16, 2010

What is the Legal Services Board For?

As I looked for images to insert in this post, my search brought up two that seemed out of kilter with my theme, but nevertheless here they are....


This Australian lawyer has been fighting a move by the Victorian Legal Services Board to remove her license to practise. In this photo she is posing for GQ magazine, just as most lawyers do...

At least this one popped up on the Legal Futures blog in reference to the LSB.

However, the real purpose of this post was to consider a negative opinion on Lawcompli.com about the value of the Legal Services Board. The introductory paragraph sets the tone:
Some may wonder what use the LSB is.  Some have called for it to kill itself off once ABS’s are introduced next year.  All must want it to prove its value as well as its value for money.  It risks adding little of value, for either the consumer or the profession. 
I fundamentally disagree with this view. First, I should declare my interest that I am a member of the LSB's Research Strategy Group.

To most observers it is clear that in the case of some professions--law, accounting, medicine, for example--self-regulation has failed. It has failed to protect clients/consumers and it has failed to open up the professions to all who wish to join. In the classic formulation the professions have ensured the continuance of protection of production of producers by producers and the protection of production by producers.

The last 30 years have intensified the call for external regulation. Now that the legal trade bodies, eg. the Law Society and the Bar Council, have had to separate off their regulatory arms (the Solicitors Regulation Authority and the Bar Standards Board), we needed a system to ensure that they carried out their regulatory responsibilities properly and in accordance with clearly defined principles.

The Legal Services Act 2007 set out those regulatory objectives and it is worth revisiting them.

They are:
  1. protecting and promoting the public interest
  2. supporting the constitutional principles of the rule of law
  3. improving access to justice
  4. protecting and promoting the interest of consumers
  5. promoting competition in the provision of services
  6. encouraging an independent, strong, diverse and effective legal profession
  7. increasing public understanding of the citizen's legal rights and duties
  8. promoting and maintaining adherence (by authorised persons) to the professional principles
While the legal profession itself promoted some of these, there were others that received a fairly lukewarm reception. This is one of the reasons why it was considered necessary for there to be an independent regulator not beholden to any legal interests to oversee the implementation of these objectives. Hence the Legal Services Board.

If we examine the current state of regulation it appears ad hoc, random, and even accidental. Take the divisions between the roles of barristers and solicitors. There is no fundamental reason for them except historical accident and a series of turf wars during the 19th and 20th centuries.

Indeed, pretty much most of the regulation is in this form. Take reserved activities:
  • the exercise of rights of audience (ie appearing as an advocate before a court)
  • the conduct of litigation (ie managing a case through its court processes)
  • reserved instrument activities (ie dealing with the transfer of land or property under specific legal provisions)
  • probate activities (ie handling probate matters for clients)
  • notarial activities (ie work governed by the Public Notaries Act 1801)
  • the administration of oaths (ie taking oaths, swearing affidavits etc).

There is no rational justification for why the list has to be composed of these activities and not others. Again, it's historical accident which has been continued.

What we haven't done yet, despite the OFT reports on the professions, the Clementi Review, and the Legal Services Act, is to undertake a rational review of the purpose of regulation. What is it for? What should be regulated? What doesn't need to be regulated? How should regulation be justified? What form should it take?

Fortunately, this is one of the tasks the Legal Services Board has taken on. Without this kind of fundamental thinking the regulatory apparatus and thinking will continue its haphazard way. And so will the kinds of views put forward by Lawcompli.com above. The Legal Services Board gives us the opportunity to stand back and frame a rational and contemporary system of regulation that will serve both consumers and producers in a complex and globalizing world.
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Sunday, August 15, 2010

Messing Around on Sunday....

A couple of things caught my eye (literally). Here's the first.

Eyes really are the window to the soul (especially when done in macro-photography)...





These are taken by an Armenian photographer, Suren Manvelyan, and you can see more of his beautiful work on his website.

And here's the second for which you need eyes as bright as the ones above to see the results.

Dalton Ghetti sculpts the tips of pencils into works of art....



Ghetti lives in Connecticut where he's a carpenter but carves these on the side using a razor blade, a sewing needle, and a sculpting knife. Many casualties occur along the road to success. You can see more at this site.

(HT to b3ta.com)
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Thursday, August 12, 2010

Optima Part Two (Or Why I Am Confused...)

(thanks to Kennedy's)

The more I think about what happened to the Optima-Capita link, the more puzzled I become. Although the SRA promoted the arrangement between the two as a breach of rules (and jumping the gun before the introduction of ABS in October 2011), it gave Optima the lightest of sanctions.

All very peculiar.

What has prompted my perplexity is that a few months back Anthony Davis brought to my attention the fact that Dewey and LeBoef in New York raised $125 million in a bond offering. Note how Bloomberg reports this
Debt in a private placement is sold directly to institutional or private investors and isn’t registered with the U.S. Securities and Exchange Commission. Law firms typically rely on bank loans and partners’ contributions to provide capital rather than outside investors, according to bankers and consultants.
Anthony then asked the obvious question: "Can somebody explain to me why this is different (or should be differently regulated) from raising equity capital?"

There is no doubt all kinds of conditions attach to this offering as Tony Williams commented: "Deterrents include fees, which can exceed $5 million, and loan covenants that may require the borrowers to maintain certain levels of cash flow or profitability."

Of course the fundamental difference is between debt and equity and this one falls on the right side of the line. So that's OK then. But let me follow up with one more observation that ties together what Davis is saying with the comment by Williams.

Peter Lederer, of Miami Law School, has noted that Citibank which is a favoured lender to many New York law firms has been enforcing the loan covenants because of the recession. The result? Partner and associate layoffs to bring profitability back into line. This is not the action of an investor but the lender. However, one can be certain that an investor's decision matrix wouldn't be any different, perhaps harsher, who knows.

So, to return to Optima: it borrowed from Capita. There was no investment. It outsourced its back office to Capita. Other law firms have outsourced their back office operations without a squeak from the SRA. Maybe the most contentious point is that Capita was awarded share options that would only be exercised when the ABS rules changed. Share options are not equity.

So, how is what Optima did any different from Dewey's bond offering or any other loan from a bank?

Though we say we are waiting for the ABS rules to switch on (a bit like Christmas lights), the reality is that it has already occurred through the back door.

Let's put this at its most blunt: the power exerted by banks (via loans, etc) and insurance companies (via PI insurance) is immense. They may know more about the operations of law firms than any other institution. What does that say about the independence of the legal profession? It adds to the multiple layers of regulation from the state level to the private, informal level, which this is. In the case of Optima we see how confused it gets when the two mingle. The question is: which is more important and to what extent is it accountable?
(thanks to save-and-learn.com)

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Monday, August 09, 2010

Alternative Business Structures Have Arrived...and Gone Already!

(Thanks to Jim Guckin)

Optima Legal set itself up to offer property and litigation services to the UK lending market. According to The Lawyer it went one step further than most other law firms and this raised trouble with the Solicitors Regulation Authority (SRA).

Optima borrowed heavily (£35m) from Capita in 2006, the outsourcing company, to fund a buyout of a volume arm of Dickinson Dees. Optima then outsourced its back office services to Capita which also took share options for when alternative business structures would be allowed (October 2011).

The SRA didn't like this and following a three-year investigation--starting in 2007: why did it take so long?--it reprimanded Optima for jumping the regulatory gun. Everything had to be put back as it was before the deal, including the 234 back office staff currently employed by Capita. The share options had to be cancelled too. Apparently Optima had taken counel's advice on the move.

Come October 2011 it can all be changed around again. What a roundabout!

Do read the comments to the story as they represent the polar opposites of views. Some, eg. Peter Rouse, ask, "Did services suffer? No, then what's the problem?" Others accuse Optima of hubris. The comment by Tony Guise raises the pertinent question of whether in fact borrowing money was wrong and that the SRA has overlooked the commercial realities of legal life.

I bet in the run-up to ABS this is going to get worse. Poor SRA...
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Sunday, August 08, 2010

Another Sunday Musing....

The picture above shows trolleys in Moscow's Kutuzovsky prospekt in 1941 and 2009.

These photomontages are put together by Sergey Larenkov, a Russian photographer. He has juxtaposed similar scenes and activities from two different eras to produce an eerie feeling into what are everyday occurrences.

Soviet soldiers at the Imperial Palace Hoffburg, Vienna in 1945 and 2010.

Wrecked "Tiger" tank in Tiergarten park, Berlin: 1945 and 2010.

There are more of Sergey's photomontages at sergey_larenkov.

(H/T to b3ta.com)
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Thursday, August 05, 2010

Legal Outsourcing to India Attracts Lawyers from West

(Lotus Temple in Delhi)
The New York Times has published an insightful article on legal process outsourcing (LPO) to India. Every member of the legal profession and those interested in it should read it. This is a real future, not the only one, but definitely part of it.

The gist of the article is that LPO has become an unstoppable force and has now reached a level of maturity that Indian LPO firms are hiring western lawyers.

Here is Leah Cooper's experience:
Leah Cooper left her job as managing lawyer for the giant mining company Rio Tinto in February to become director of legal outsourcing for CPA Global, a contract legal services company with offices in Europe, the United States and India. Before hiring Ms. Cooper, CPA Global added lawyers from Bank of America and Alliance and Leicester, a British bank. The company has more than 1,500 lawyers now, and Ms. Cooper said she planned to hire hundreds in India in the next 12 months.
Admittedly, Cooper is one of the early acolytes of this movement and therefore proselytizes forcefully. But, as I mentioned in a post on the ILEC IV Stanford conference, David Wilkins at Harvard has been researching this area and he agrees that it is a fundamental change in the lawyering process.

What is changing is that instead of being seen as an inferior form of life, LPO companies are now attractive to lawyers. This is comparable to two earlier movements.

For a long time inhouse lawyers were considered second class citizens of the legal profession. Now look at their power, authority and clout compared to private practice lawyers. No one considers them inferior now.

Software development is another comparator. For a long time companies in Silicon Valley took Indian programmers because they were good and cheap. Then Indian software companies started growing and moving into Silicon Valley. Indians were being hired in San Jose and Bangalore as well as Americans.

I imagine similar things will happen to LPO companies, especially when the big consulting firms move in as they will.

If you want to judge the reaction to this movement, read some of the 219 comments attached to the article: I'm afraid they are rather forlorn and reactionary.

All of this is augmented by an article in the Economist on law and globalization which looks at restrictive practices by countries (eg. India, Canada, China) wanting to limit international lawyers.

Finally, this all fits in with the moves towards global liberalization of services, including legal services that I commented on below. Lawyers and the legal profession must start thinking creatively how they want to meet this new world. 
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Wednesday, August 04, 2010

Europe Wants to Liberalize Services and This Includes Lawyers


(thanks to praized)

In my paper "From Ethics to Regulation" I have shown how at the global level legal services and lawyers are being subsumed under the general category of services. In GATS the idea is to remove barriers to trade in services. To the dismay of lawyers, there is no special category for the legal profession. What's worse is that they are likely to be classed with accountants.

The European Union is now pushing this agenda. In 2006 the Services Directive was adopted with transposition into national law by the end of 2009. The European Commission is requesting submissions for an evaluation of the mutual evaluation process. In other words how is the directive being applied particularly in relation to the requirements "either on the establishment of service providers or on the cross border provision of their services".

Once again, lawyers are only referred to obliquely as legal advisers among others.

The European Commission argues in the consultation document that
The Services Directive has the potential to foster growth and job creation in the largest, most dynamic and innovative pillar of the EU economy, the services sector. This becomes even more vital in the context of the current economic crisis. According to conservative estimates, the potential economic benefits of the Services Directive could range between 60-140 billion euro, representing a growth potential of 0.6-1.5% of GDP. But these gains can only be reaped if the Directive is implemented fully in all EU countries.
The kinds of things being consulted on include: any specific legal form for provision of services (eg. partnership or sole practitioner); bans on establishments in more than one country (eg. European law firms); minimum or fixed prices for services; any limitations on the provision of other services (eg. MDPs).

The UK response is quite liberal. The only limits on legal services are in claims management which must be authorized, and for insolvency practitioners who have reserved activities.

Contrast this with Greece, for example, to see the other side. Minimum tariffs are applicable for lawyers; lawyers can't have more than one establishment in Greece; and no MDPs for lawyers.

Italy is a halfway house with restrictions on form for lawyers (solo practice or partnerships owned by lawyers); minimum tariffs and fixed prices have been removed, but maximum tariffs apply; and MDPs have restrictions.

There's a long way to go yet. Not all member states have yet implemented the directive, while, some like Greece appear to have taken an overly restrictive view. Italy clearly just hasn't got round to doing it properly.

The consultation is open to consumers, businesses and other interested parties. The closing date is 13 September 2010. Documents can be downloaded from the European Commission consultations page.

(H/T to Richard Parnham)
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Monday, August 02, 2010

The Future of Lawyers Redux


Back in May I reported on some research done by legal recruiters, Badenoch & Clark, on the Future of Law. There was a big divergence of views between partners and associates in law firms.

They have produced some more findings that continue the theme.
  • 24% of associates plan to leave the legal profession in the next year. Eight per cent want a career break and 16% are quitting the profession.
  • 34% gave difficulty of work-life balance as main reason for leaving.
  • 10% cited personality and management problems as another reason for departing, emphasizing gaps between management and employee communication.
  • And here's an interesting quote from the research:
    An absence of communication over the future of the profession, such as change from lock step to merit based pay, has been a catalyst for relationship issues between management and associates to surface. The survey found that 47% of partners had discussed plans to change their firms’ pay structure over the next five years, yet only 23% of associates believed such discussions were taking place.

If we accept that associates are meant to be potential future members of the law firm, ie. partners, this research shows either that's a myth or partners haven't got a clue about how the organization of a law firm operates. I suppose there's nothing to say it can't be both.
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Sunday, August 01, 2010

Just a Sunday Passing Fancy....

(My precious pearl)

Adele Enerson is a new mother. When her baby, Mila, is sleeping, Adele likes to imagine what she is dreaming. So in the space of a few minutes, so as not disturb Mila, she creates the dream and captures it.

(Bookworm)

I just find these enchanting. Watch Mila's Daydreams...
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