I am honored to have the opportunity to testify before this commission. I have read the material contained on your web site. Prior testimony including summaries of oral presentation and written material has been thoughtful and thought provoking. Multidisciplinary practice, however, should be only one area of concern. This profession must boldly reinvent itself.

Our Changing World

Watts Wacker and Jim Turner, authors of The 500 Year Delta, What Happens after What Comes Next¹, tell us that we are leaving the 500 year old age of reason. We are at a point of discontinuity (see below) as we look at the confluence of three fast-moving trends:

1. The shift from reason-based to chaos-based logic
2. The splintering of social, political, and economic organization as we know it
3. The collapse of producer-controlled consumer markets and the rise of consumer-controlled consumer markets.

Disintermediation is our descriptor for the elimination of the middle person. The real estate lawyer handling closings is a target for the disintermediator lenders, realtors, and Internet real estate selling services. If you can eliminate one player from a meeting, you are disintermediating.

Jurisdictional boundaries disappear in an Internet driven transaction where anyone in the world is less than 1 second away from anyone else. At the Toronto Annual Meeting in 1998, I appeared on a panel along with Roberta Katz and other distinguished panelists to discuss "The Ends of the Profession." Frank Feather posed the central question before us as "In a time of revolutionary change, the 'Big Question' is of course, 'What does unprecedented change imply for a precedent-oriented profession?'"

I suggest to you that we must stop asking, "What was?" and start asking "What if?"

From Producer Driven to Consumer Driven

In addition to competition from accounting and financial services companies, there are other forces at work that deserve study. Internet access provides information to the public that was only available to lawyers a few years ago. We have moved from a producer driven economy to a consumer driven economy.

The 21st Century Law Practice

Richard Susskind predicts that information technology will leave us with three levels of transactional practice. Traditional practice will be the high-end practice for large business entities now handled by large law firms. The accounting firms using their standards approach will be major competition.

Susskind's second level of practice is commodity and he sees this as an open market with lawyers, accountants, financial planners and other providers. Multidisciplinary services will work better in this market. The commodity market, as typical of most commodity markets, will be very price competitive. Clients and service providers at this level may or may not establish a one to one relationship.

The Susskind third level is latent services. These are general answers to questions available for very low prices on the Internet.

Clear the Decks

We must zero base the future. If we put back some of the pieces from the past it will be because we believe those pieces fit the 21st century practice, not because we "have always done it that way." We must identify the new skills, reshape our services portfolio, redesign our processes, and redirect our resources. Firms can not afford to wait for the ponderous timelines that guide the American Bar Association. We must go forward now, but these monumental changes would come much easier to the members if we can find some leadership and guidance from the organized bar.

We must stop defending past and current practice and create future practice for our profession. We don't have time for baby steps. Nicholas Negroponte is correct when he warns us that incrementalism is innovation's worst enemy.

We must begin at the beginning and determine what questions must we ask?

How do we want our profession to be shaped in the next 5 to 10 years?

What are the current forces impacting the profession? The AICPA Vision Statement listed 8:

1. Non-CPA competition
2. Decline of new CPAs
3. Borderless world
4. Technological advances
5. Pressure to transform finance from scorekeeper to business partner
6. Market value shifts- perceived value of traditional services diminishing
7. Leadership imperative- advisors to corporations must be insightful, have new skills, and extraordinary agility. The world of commerce is global, technological, instantaneous, and increasingly virtual.
8. Technology displacement- traditional skills replaced by technology

1. Political forces
2. Economic forces
3. Social forces
4. Technological forces
5. Human resource forces
6. Regulatory forces

1. What are the core values of the profession? Core values are the essential and enduring beliefs we uphold over time. Our core values enable us to retain our unique character and value as we embrace the changing dynamics of the global economy.
2. What are the core services of the profession? Core services are the services we perform for a fee or salary.
3. What are the core competencies of the profession? Core competencies are the unique combination of human skills, knowledge, and technology that provides value and results to the user. We must identify, enhance, and create new core competencies to maintain and grow key roles in the marketplace⁴.
4. What are the significant issues, including but not limited to global forces and scenarios that may provide opportunities and challenges for the profession. Factors we must face to create a viable, long-term future for the profession.

1. The only constant is change at an unprecedented pace.
2. CPAs will have to move up in the economic value chain.
3. The public interest must be protected.
4. Diversity of experience and thoughts must be leveraged.
5. Profession must decide whether its professionals are leaders or followers.

Twenty-first Century Practice Skills

I have tried to read most of the salient business literature on the future. I have concluded that the successful 21st century lawyer will need to develop 21st century lawyer practice skills. Our educators must start teaching these skills as part of a 21st century curriculum from high school to law school. Continuing Legal Education curriculum must reflect the revolutionary change and provide relevant training and education. The skills are outlined below. In the interest of space, this outline deals most extensively with change skills, then becomes illustrative.

1. Change skills
   1. Quantum change versus incremental versus stare decisis
   2. Change in business cycles from years to months to days
   3. Five Factors Critical to Successful Change Implementation from Implementation Management Associates, Inc. (IMA), Brighton, Colorado
      1. Implementation Climate
         1. Best predictor of future performance is past performance.
         2. Regardless of the importance of the change, institutional memories of poor change performance will exert a powerful negative influence on perceptions of the likely success of today's change effort.
         3. High likelihood that ineffective past behaviors will be repeated.
      2. Sponsorship commitment
         1. Sponsors are those who can authorize or legitimize the resources required to implement the change initiatives.
         2. Role to continually demonstrate their commitment to the changes needed by walking the walk.
         3. Communicate and reinforce a strong sense of dissatisfaction with the status quo
         4. Sensitive to the human side of change
         5. Insist on reward systems and monitoring plans suitable to the new system.
         6. Every employee will watch the behavior of the sponsors to see if there is serious effort or is this the "program du jour."
      3. Change agent skills and motivation
         1. Common attributes
            • Successful personal and organizational history.
            • If person perceived as "fast track," so is the project.
            • Have the confidence of the targets-those who will actually change how they operate.
            • Conduit of information to ensure accurate transfer of frames of reference between the strategic thinkers and those carrying out more short-term, tactical actions.
            • Must generate and sustain the broad framework of involvement that serves as the foundation for an effective new change.
            • Critical to assess skills and motivation of potential change agents before they take on the change agent role.
      4. Target readiness
         1. Targets are those who must actually make fundamental changes in how they work
         2. Will generally resist any change effort in varying degrees, even when the change is perceived as positive.
         3. Resistance to change is a normal response of people who have been asked to trade the comfort zone of the status quo for the uncertainty of a new way of operating.
         4. Identify key target groups level of resistance
            • Have low perceived need?
            • Have unclear expectations?
            • Have doubtful successful outcomes?
            • Have unknown outcomes?
            • Seem irreversible?
            • Have negative outcomes?
            • Have low reward and high cost?
            • Cause a high level of disruption?
            • Have low involvement?
            • Imply poor past performance?
         5. Identify levels of resistance
            • Overt resistance rare
            • Subtle covert resistance slowly saps the vitality of even the best new programs.
            • Lip service and delay tactics common strategies to resist improvement.
            • Bureaucratic inertia such as budget and schedule can kill powerful changes.
      5. Cultural support
   4. Change skills and analysis, John P. Kotter, Leading Change, Harvard Business School Press, 1996, Why Transformation Efforts Fail, Harvard Business Review, March-April 1995, pp. 59-67 Kotter's Eight-Stage Process of Creating Major Change
      1. Establishing a sense of urgency
         1. Examining the market and competitive realities
         2. Identifying and discussing crises, potential crises, or major opportunities
         3. Error # 1: Not establishing a great enough sense of urgency (75% or more of management is honestly convinced that business as usual is totally unacceptable.)
      2. Creating the guiding coalition
         1. Putting together a group with enough power to lead the change
         2. Getting the group to work together like a team
         3. Error # 2: Not creating a powerful enough guiding coalition (Companies that fail in phase two usually underestimate the difficulties of producing change and thus the importance of a powerful guiding coalition. Apparent progress for awhile, but sooner or later opposition gathers itself together and stops the change.)
      3. Developing a vision and strategy
         1. Creating a vision to help direct the change effort
         2. Developing strategies for achieving that vision
         3. Error # 3: Lacking a vision (If you can't communicate the vision to someone in five minutes or less and get a reaction that signifies both understanding and interest, you are not yet done with this phase of the transformation process.)
      4. Communicating the change vision
         1. Using every vehicle possible to constantly communicate the new vision and strategies
         2. Having the guiding coalition role model the behavior expected of employees
         3. Error # 4: Under communicating the vision by a factor of ten (Walk the talk by consciously attempting to become a living symbol of the new corporate culture. Deeds are more powerful than words.)
      5. Empowering broad-based action
         1. Getting rid of obstacles
         2. Changing systems or structures that undermine the change vision
         3. Encouraging risk taking and nontraditional ideas, activities, and actions
         4. Error # 5: Not removing obstacles to the new vision (In the first half of a transformation, no organization has the momentum, power, or time to get rid of all obstacles. But the big ones must be confronted and removed. Action is essential, both to empower others and to maintain the credibility of the change effort as a whole.)
      6. Generating short term wins
         1. Planning for visible improvements in performance, or "wins"
         2. Creating those wins
         3. Visible recognizing and rewarding people who made the wins possible
         4. Error # 6: Not systematically planning for and creating short-term wins (Commitments to produce short-term wins help keep the urgency level up and force detailed analytical thinking that can clarify or revise visions.)
      7. Consolidating gains and producing more change
         1. Using increased credibility to change all systems, structures, and policies that don't fit together and don't fit the transformation system
         2. Hiring, promoting, and developing people who can implement the change vision
         3. Reinvigorating the process with new projects, themes, and change agents
         4. Error # 7: Declaring victory too soon (Don't declare victory with the first clear performance improvement. New approached are fragile and subject to regression.)
      8. Anchoring new approaches in the culture
         1. Creating better performance through customer and productivity-based behavior, more and better leadership, and more effective management
         2. Articulating the connections between new behaviors and organizational success
         3. Developing means to ensure leadership development and succession
         4. Error # 8: Not anchoring changes in the corporation's culture. Two factors:
            • First, a conscious attempt to show people how the new approaches, behaviors, and attitudes have helped improve performance. People tend to create very inaccurate links.
            • Make sure next generation of top management really does personify the new approach.
2. Planning Skills
   1. Strategic
   2. Long range
   3. Beyond long range- tuning long range antenna
      1. Process
         1. Paradigm hunting -Joel Barker
            • Possibilities
            • Implications - What would be the impact of this impossible task if we were able to do it?
      2. Specific
         1. Clicking per Faith Popcorn - 16 new trends and the Clickscreen
         2. Megatrends et seq. John Naisbitt
         3. Nostradamus
3. Thinking skills
   1. The box
      1. Inside
      2. Outside
      3. Is there a box?
   2. Learning
      1. Mind mapping
      2. Reading comprehension
   3. Lateral Thinking de Bono
   4. Edward de Bono Six Thinking Hats
   5. Creativity (see de Bono "Surpetition")
4. Technology skills
   1. Levels of proficiency
   2. What do we need to know?
   3. Formal training
   4. The personal technology trainer
5. Marketing skills
   1. Niche
   2. The one to one marketplace
   3. Determining unmet need
6. Management skills
   1. Can we still define management in classic terms?
   2. Manager vs. Leader.
   3. Nimble management
   4. Pricing of services
      1. Value provider
      2. Cobb's value curve
7. Substantive knowledge skills
   1. Lawyer as technical specialist
   2. Lawyer as part of multidisciplinary team
   3. Redefining CLE
   4. Teaching customers/clients
8. Law firm as the plan implementer as well as the plan designer
9. Leadership Skills
10. Visioning Skills
    1. See AICPA Vision Statement
    2. Abundant business literature on visioning
11. Creativity
12. Innovation

What Must Happen Now

I believe it is time to leave the past and embrace the future of the profession. What can the American Bar Association do to lead the profession into the 21st century?

1. The Commission on Multidisciplinary Practice must make clear recommendations in its report to eliminate ethical constraints that prevent ethical lawyers from full competition with other service providers.
2. Allow consumers to determine the amount of regulation needed in the areas of conflict of interest, multidisciplinary practice ownership, and solicitation.
3. Replace current Model Rules with aspirational guidelines of Professionalism including honesty, integrity, competency, and service.
4. Appoint a commission or task force with continuity to help the profession study and envision the future. The Commission on the Future of Law Practice (hereinafter "Futures Commission") should report to the Board of Governors and make recommendations on how to teach the profession to change and thrive in the next century. The ABA Planning Director, Dolores Gedge, should staff the Futures Commission. The Futures Commission should develop model curricula and material to assist state and local bar leaders to find the future. Law schools and ACLEA should be represented on the Commission. Commissioners on the Futures Commission should be representative of areas of law practice as well as disciplines other than law.
5. As we begin to implement change we must look at strategic future issues such as:
   1. Are we bringing the profession together or fragmenting it further?
   2. Are we driving the profession up or down the food chain?
   3. Are the current structures of the organized bar appropriate to support and enhance the future of the profession?
   4. Are we continuing our reliance on regulatory exclusivity or are we gaining market exclusivity or dominance where appropriate?
   5. Are we losing or capitalizing on our history?

• Buying a stronger whip
• Changing riders
• Saying things like "This is the way we have always ridden this horse"
• Appointing a committee to study the horse
• Arranging to visit other firms to see how they ride dead horses
• Increasing the standards to ride dead horses
• Declare the horse is "better, faster, cheaper" dead
• Harnessing several dead horses together for increased speed

Conclusion

We have much to offer the public, but we are riding a dead horse. Incremental change won't help us. We must mount the 21st century cavalry to charge forth to serve the public and our great profession. Thank you for your time and consideration in allowing me to share my thoughts.

Footnotes:

1. HarperBusiness, 1997
2. CPA core values included continuing education and life-long learning, competence, integrity, attuned to broad business issues, and objectivity. AICPA Vision Statement Report pp. 13-14, www.cpavision.org 1998
3. CPA services identified were assurance and information integrity, technology services, management consulting and performance management, and financial planning and international services. Vision Statement pp. 14-17.
4. CPAs identified communications and leadership skills, strategic and critical thinking skills, focus on the customer, client, and the market, interpretation of converging information, and technically adept as the core competencies. Vision Statement pp. 17-19
5. These questions adapted from AICPA Vision Statement

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