What Law Can Learn From Baseball-Value Extraction, New Skillsets, And Culture Change
Law and baseball share much in common. Each is self-regulated, rooted in tradition, operated as a guild for generations, big business, highly profitable—especially in major markets, and increasingly beyond the reach of most potential consumers except corporates. Both have dual identities; the law is profession and business; baseball is sport and business. Each has played that duality to its advantage. Baseball is exempt from antitrust laws because the United States Supreme Court has repeatedly characterized it a “sport,” not a business. Law is regulated by lawyers that thwart competition, relying on the false pretense that it is solely a profession and not the huge business that it is. Both industries have had insular, self-perpetuating cultures. Each is becoming more specialized, competitive, global, and data-driven. And each has new ‘players’ with new skill sets that are redefining the industry.
New Players in the Lineup
Baseball is no longer solely about ballplayers. Players take the field, turn double plays, and spit tobacco juice over the dugout rail. But MBA’s, data analysts, and lawyers—not ex-ballplayers— now determine who, when, and at what price players suit up. A new breed of baseball cognoscenti handle the business of the game. They are as much a part of baseball—and equally big stars-- as front-line pitchers and sluggers.
Law is no longer solely about lawyers. Like baseball, it has a new cast of delivery experts tasked with deploying the appropriate resources to optimize value in the delivery of legal services—among other ‘business of law’ tasks. Legal operations professionals, as they are often called, have business and technological expertise as well as knowledge of how ‘practice’ intersects with delivery. They are playing increasingly pivotal roles in the legal industry. This is creating cultural friction with practice-centric traditionalists s for whom data analytics and other new skillsets are a threat to the traditional ‘brute force,’ labor-intensive partnership model now in its sunset.
The ascent of legal operations is also creating changes in delivery structure, economics, and law’s power structure. An accelerating migration of work to corporate legal departments as well as stand-alone law companies like Elevate, UnitedLex, and Axiom provides consumers with new delivery options. That has attracted the renewed focus of the Big Four accounting giants and other global, multi-disciplinary professional service companies that vie for ‘legal’ work except for differentiated (regulated) practice activities.
Baseball has rounded the base path in melding ‘sport’ with business. Law is taking a wide turn around first in the process. It’s worth taking a closer look at how baseball has crossed home plate in its structural and cultural transformation and what’s holding up law.
Moneyball—Finding Unicorns with Data Analytics
Baseball experienced two transformative events in the early years of the new millennium. Neither had anything to do with on-field play. One involved the publication of a book, and the other was the Boston Red Sox hiring a 28-year- old General Manager with no baseball playing or coaching experience. The confluence of these events is as much a baseball watershed as Babe Ruth’s home run orgy that led to the construction of Yankee Stadium.
Michael Lewis’s publication of Moneyball in 2003 and, later, the Brad Pitt/Jonah Hill screen adaptation not only changed fan perception of 'our national pastime' 'but also became an enormous crossover sensation. It created an eponymous revolution not only in baseball management but also in business. ‘Moneyball’ is part of our vocabulary, extending well beyond the foul lines of the diamond. It refers to challenging established management orthodoxy and looking beyond conventional metrics to uncover undervalued assets. It is synonymous with innovation and iconoclasm-- doing ‘more with less.’ It also involves mixing data with gut in decision making and introducing new management profiles/skillsets into the process.
Billy Beane, a former ballplayer turned General Manager of the Oakland A’s, disrupted baseball purists and big-market, bigger payroll teams by building a consistent, small-market winner with discarded, low-budget players. Beane and his Yale-educated assistant GM mined undervalued talent with data analytics and metrics overlooked by others. Beane eschewed traditional baseball statistics and focused instead on overlooked ones that he believed better predicted performance and impact. Beane was the archetype for ‘doing more with less’ years before that term became a staple of business-speak.
Law and Theo Epstein—A New Superstar with Different Skillsets
Billy Beane was the hero of Moneyball, but he was neither the archetypal general manager of the movement nor its greatest success. That distinction goes to Theo Epstein whose impact on the game is arguably as profound as Ruth’s. Epstein applied a mix of legal, business, and data analytics skills to the front office that revolutionized the game. Most players and front-office executives questioned his hire because of age, absence of baseball credentials, and Ivy League background. Those doubts were erased when Epstein architected the Red Sox to a World Series triumph, erasing the 86-year ‘Curse of the Bambino.’ Epstein had a larger budget than Beane, but other big-market executives did too. Epstein demonstrated that he could influence a franchise more than even a star player--baseball was no longer just about ballplayers.
Baseball was quick to recognize Epstein’s success (reprised with the Cubs where a 108-year World Series drought was broken). Epstein ushered in a whole new breed of front office talent. Young, professionals with Ivy League backgrounds and little or no baseball playing experience became the front office norm. Business, legal, and data analytics became as integral to winning baseball games as star players.
And this begs the question: how are law's Beanes and Epsteins and why have they not been accorded the free rein and status of star practitioners and rainmakers?
What’s Really at Issue is the Soul of the Industry and Who Runs It.
A similar cultural clash is playing out in the legal industry where many lawyers still regard ‘non-lawyers’ as interlopers, unworthy of an equal seat/voice at the management table. Data analytics is perceived by many as a threat to professional judgment and another sign of ‘The Death of Lawyers.’ They cite their experience as the bedrock for advising clients in an increasingly data-driven world. That’s not a winning argument anymore, especially with corporate clients. As in baseball, gut is now augmented by data analytics and a new suite of personnel and resources that promote more informed, accelerated, and cost-effective decision making and delivery.
The practice of law is shrinking; the delivery of legal service is expanding. Law, like baseball, is witnessing a new division of labor. It is also experiencing a power shift from those that practice to those that deliver legal services--the business of law. Medicine and baseball provide analogs.
Legal culture is the biggest impediment to industry disruption. Change is not being driven from within the profession but by consumers. Clayton Christensen’s theory of ‘disruptive innovation’ is being played out in the retail segment of the legal marketplace. Well-capitalized, tech and process savvy providers like Legal Zoom and Rocket Lawyer are redefining the delivery of ‘retail’ legal services, providing access to millions of new customers. LegalZoom has already serviced more than four million customers, including more than a million small and mid-sized businesses. The company is providing consumers with a range of service/product options, easy access, and aggressive pricing. LegalZoom has a dazzling consumer satisfaction record. That success has not come without a fight; the company has successfully defended several unauthorized-practice-of-law actions by State Bars.
The retail market segment is changing despite lawyers, not because of them. The same is true in the corporate market segment; consumers are driving the bus and holding the legal industry to business standards. The C-Suite is putting pressure on General Counsel to operate more efficiently not only with legal suppliers but also internally. Lawyers no longer control both sides of the legal buy-sell dynamic; procurement and CFO’s are increasingly involved in legal buying decisions. And as in-house counsel spend more time as business collaborators and less as defenders/guardians, the pressure to be efficient in legal delivery mounts. That is what is fueling the growth of law companies, the Corporate Legal Operations Consortium (CLOC), and other companies and organizations with the expertise and skill sets to respond to the C-Suite mandate.
Legal culture is slow to embrace change but technology, data analytics, and other interlocking competencies of legal operations (artfully articulated by CLOC) are now as much a part of the legal industry as trial lawyers and tribunals. Data is substituting for ‘reputation,’ projection, and anecdotal precedent in legal decision making. It is mined and analyzed to optimize legal service delivery by cutting cost, accelerating delivery time, and mitigating risk by enabling more informed decision making. Law, like baseball, is witnessing a new breed of ‘stars,’ and it’s time they are accorded equal voice and status with practice leaders.
The delivery of legal services is now an interdisciplinary, collaborative process that involves legal, business, and technological expertise. The legal ‘profession’ is becoming subsumed by the legal industry. The faster lawyers embrace collaboration with the industry’s new players—human and machine—the stronger the profession will be. Those that continue to resist will be ignored by consumers.
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