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http://www.patrickmckenna.com/blog
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Post # 514 – Tuesday, December 21, 2010
A Year In Review
 I’m often asked about my consulting practice, what kinds of assignments I get called in on, for what sized firms; what I’m currently researching and writing about, and just generally how I spend my professional time. I looked back over my various activities during this past year. With some of these items (like clients served) activity is not a sufficient measure; results and the client’s satisfaction are really what counts (and to that end, you can find numerous client testimonials and commentary throughout this web site). But for purposes of looking at where one’s time is invested, here is what my 2010 looked like:
• Client Firms Served:
GEOGRAPHIC LOCATIONS
73% U.S. Based
9% Canadian
18% International
NATURE OF ASSIGNMENTS
55% developing comprehensive strategic plan
36% management and leadership issues
9% client relations and marketing projects
FIRM SIZE RANGE
27% firms of over 500 attorneys
18% firms of 300 to 500 attorneys
55% firms of 100 to 300 attorneys
• Initiated 2 Published Research Projects covering:
- Managing Partner’s Issues
- Bring About Change: What works and what doesn’t
• Participated in 5 Speaking Engagements:
Conference Chair & Presenter: Change Leadership (March)
Presenter - Alternative Fee Arrangements Seminar (March)
Facilitator: Practice Leaders Masterclass – ARK Group (August & December)
Panel Participant: American University College of Law Conference (October)
• Authored or Contributed to 25 Articles in Publications including:
American Lawyer Magazine
Managing Partner Forum e-Newsletter
Of Counsel – Legal Practice and Management Report
Australasian Law Practice Journal
ABA Journal – Law News Now
CBA PracticeLink – Law Firm Leaders Edition
SLAW – Cooperative Legal Weblawg
VSAE Association Press - Society of Association Executives
PSF Journal
• Acknowledged as a Contributing Source to 3 New Books:
- Legal Department Benchmarking Report 2010
- Strategy Development For Practice Group Leaders -- ARK, to be published January 2011
- the second in 2011 is not yet titled and will deal with the issues facing managing partners
• Honors
- My Leadership Rants blog was identified as one of the top twenty practice management resources and also recognized by Accounting Web.
- Finally, I have MBA students from Harvard interviewing me in the process of researching and writing a Case Study on my exploits - from starting Edge to my latest adventures.
 In spite of the challenges we face in the world, I am extremely thankful for the privilege of doing what I do. I might call this brief snapshot my personal Annual Report.
To everyone: I wanted to say thanks to you for being able to serve and spend time with you in the past. Thanks for your confidence and commitment.
To my valued clients: I look forward to serving you again in the future.
To my colleagues and friends: thanks for being a gift in my life.
I wish you and your family the very best for 2011.
Post # 513 – Tuesday, December 21, 2010
Seeing Possibilities Where They Didn’t Yet Exist
 Given that it is the end of another decade, I was struck by a story that you may have heard before, but was news to me:
Apparently, some ten years ago Ralph Palumbo and Otto Klein, two partners in Heller Ehrman’s Seattle office, presented to their firm’s chairman a 20-page document. Though its official title was “Creating the Law Firm of the Future,” it came to be known as “The Manifesto.” And it was nothing short of revolutionary. The Manifesto had clear intentions. “Our task was ambitious,” Palumbo and Klein wrote: "To make the practice of law more fun, more productive and more profitable."
Its prescriptions included eliminating the hourly rate system, providing a service guarantee, allowing customers to define success, radically reducing overhead by vacating high-rise office space and moving to a renovated warehouse, abolishing the title of “associate” to make every attorney an equity partner, and instilling an unrelenting obsession for customer service. Perhaps the most unsettling proposal to traditional law firm owners was to include a blank line at the bottom of every invoice where clients could add or subtract from the total fee based on their perceived value of the service.
In short, Palumbo and Klein looked at law firm management as it had been practiced for decades and saw an opportunity for something different: They reframed a firm’s success as defined by clients instead of by attorneys. They appreciated each lawyer’s expertise and contribution to the firm instead of focusing on the partners at the top of the hierarchy. They embraced warehouse space as viable real estate instead of dismissing it because it wasn’t at the top of a building. They envisioned new practices in billing, customer service and organizational relations that could build satisfaction and value for customers, lawyers and the company.
Robert Rosenfeld, chairman of Heller Ehrman, didn’t fire Palumbo and Klein for their insurgent and entrepreneurial thesis. Instead, he invited them to present it to the firm’s partners for consideration. When it became clear that the other partners weren’t quite ready for a revolution, Palumbo and Klein started their own firm, Summit Law Group, using the Manifesto as its foundation. Today, Summit Law Group employs 24 attorneys (all equity partners) and touts an A-list of clients whom they serve in its class-C office space.
According to one Summit Law Group member, “We determined that our physical plant—office layout, location, and design—would be critical to enabling us to implement our theories. So we found office space outside of the downtown district, designed the interior so that all offices are sized and configured similarly regardless of seniority or status, and oriented workspaces to maximize the benefits of technology. This lowered our overhead so that we could lower our rates."
"We also promoted a sense of mutual respect and value for all employees so that we could promote teamwork; and we subordinated superficial trappings of traditional law firms in favor of technology to maximize efficiencies. By envisioning and creating equitable work spaces, eliminating hierarchical distinctions between partners and associates, and inviting all the firm’s attorneys to become owners of the business and help make decisions, the firm cultivated an entrepreneurial culture and gave all employees a stake in its success."
Here’s to 2011 . . . the start of a new decade that will require of the most successful firms that they focus intently on value, transparency and innovation. And here is to the prospect of more lawyers creatively exploring opportunities to examine alternative points of view, question conventional perspectives and brainstorm new possibilities!!!
Post #512 – Friday, December 10, 2010
Does Your Firm Have a New Leader About to Take Office?
 Does your firm have a new leader about to take office? How is that individual going to prepare themselves for the (often, unexpected) challenges that lay ahead?
From my work, I can confirm that most every new firm leader transitions through four very predictable phases early in their tenure . . .
- from ‘Anticipation’ (the peak of inflated expectations)
“I guess my partners really do think that I can lead this firm to greater heights”,
- to ‘Adjustment’ (the trough of disillusionment),
“What the hell did I get myself into?”
- to ‘Acclimation’ (the slope of enlightenment),
“Given what I’m dealing with, how do I make this work?"
- to finally, the phase of ‘Acceleration’ (the plateau of productivity)
“I think I’m starting to get the hang of this!”
What is important for the newbie is to recognize each of these predictable stages, the traps inherent at that point in the transition process and what he or she must do to transcend those pitfalls. My research clearly shows that without guidance, by the 10-month mark, over 40% of new firm leaders are finding the job extremely difficult and not what they expected. One needs only look to Jeffrey Kindler, the General Counsel who became CEO at Pfizer who announced his unexpected resignation last Sunday and is the rare CEO to publicly acknowledge that the job just “wore him out!”
The role of being a law firm leader today is more stressful than ever, thanks to a greater emphasis on economic stagnation, globalization, commoditization, and competition. Unfortunately, new leaders aren’t exactly receiving much by way of prescriptive guidance, with only 14% reporting in my survey of 92 law firms (November 2010) that they were given any coaching by their predecessor – or others in the firm.
And this is a key point: transitions are times when momentum builds or it doesn't, when opinion about the new leader begins to crystallize. It's a time when feedback loops - virtuous cycles or vicious ones - get established. Any observable misstep can feed a downward spiral that then can be hard to halt It is far better for a new leader to secure an early win that builds personal credibility, rather than dig themselves into holes and have to scramble back out. That's why the 100-day transition period is so important.
Now there is a special program available for new law firm leaders. The Fourth Annual session entitled: First 100 Days: Master Class For The New Managing Partner is scheduled for Wednesday, January 26 at the American Management Center in New York. Earlier sessions have been attended by new managing partners at: Cozen O’Connor, Davis Wright Tremaine, Drinker Biddle, McCarter & English, Irell & Manella, McDermott Will & Emery, Holland & Knight, Vorys Sater and over 40 other firms from four different countries.
According to the (unsolicited) comments of one firm leader, a full year after attending our first session: “Your program really did help me to prioritize my goals and objectives for the first 100 days. As I look back, I really didn’t know what I didn’t know leading up to taking on this new responsibility as the Managing Partner. The guidance and suggestions I took away from the seminar (and reading materials) were extremely helpful. I had a much better understanding of what to expect. I really do appreciate all of your help.”
For more information, please give me a call: 780.428.1052
Post #511 – Tuesday, December 7, 2010
Looking To The Economy in 2011
My earlier posts noted what future law firm leaders need (#506) and what a future law firm might look like (#507) so perhaps it’s time to touch on what the future economy may bring. What a couple of weeks it has been for the economy. A bold plan to slash the U.S. budget deficit failed to win the support needed to trigger legislative action in Congress. The government confirmed that the unemployment rate jumped to 9.8% (at least). And if that wasn’t enough, the government has now extended unemployment benefits and expiring tax cuts that will add to the current deficit - about another 700 to 800 billion dollars!
 And what a deficit it is becoming. A trillion dollars here, a trillion there.
When a company experiences what accountants call 'a material adverse impact' on its expected future earnings, and those changes affect an item that is already on the balance sheet, the company is required to report the negative impact - 'to take the charge against earnings' - as soon as it know that the change is reasonably likely to occur (at least that is how it was when I sat on the board of a public company). These days, governments seem to believe that Generally Accepted Accounting Principles are some sort of conspiracy. For example, the current debt numbers start to get really hairy if you add in liabilities under Social Security and Medicare and there is no national nest egg to fund those entitlements. Then you can add in another $1 trillion for the retirees' health care and other benefits at the state level, another $1 trillion (or more) in liabilities related to guarantees of the Fannie Mae and Freddie Mac bailouts . . . and pretty soon were talking about some serious money that is owed!
Boston University economist Lawrence Kotlikoff told us all a couple of month back (in a widely quoted article in Finance and Development, a journal of the International Monetary Fund) that the US government debt was NOT $13.5 trillion as most global investors and taxpayers think, but really more like $200 trillion. BUT, is anybody listening?
In my article (Managing Through A Prolonged Downturn) from August 2008, I forecasted that "for the next five years, every time you think it's safe to get up and dust yourself off from this downturn, every time you feel like you've endured the worst of it, another piece of news is going to come along to freshly bludgeon you. This time the economic slowdown is going to be a lot different and, in many ways, a hell of a lot tougher." Meanwhile, I received an e-mail from my favorite economist colleague warning that: "Next year is going to be worse than 2008 – a lot worse. Here's why:
1. The euro is going to fail. Ireland, Spain, and Italy's sovereign debt cannot be financed. Shares of even the biggest and strongest of Europe's banks (Deutsche Bank) have begun to "roll-over."
2. More QE in Europe and America will make it much more difficult for businesses to invest across borders. That will result in massive trade problems and could easily cause a global famine. Most people don't realize how dependent the world has become on free trade for basics, like food. Agricultural prices have increased dramatically since July when QE II began. Vastly higher agricultural prices are not bullish for financial markets or world order.
3. Housing in the US is going to collapse, again. The various games that have been played to prop up the housing market in the US have failed. Tax credits, etc. haven't worked . . . and they never had a chance. According to contacts in this industry things are completely bleak. With foreclosed properties making up 25%-50% of the inventories, housing prices will continue to fall 10%-15% a year - or more. There will be no new net demand for homes for a long time. Several major homebuilders will go bankrupt, including the largest, Pulte.
4. Lots of major US corporations - see GE - have unsustainable debt loads. These companies will end up bankrupt and will fire at least 50% of their employees over the next three years.
5. Probably half of the states and municipalities in the US are being run in a way that's completely unsustainable. Beyond the official federal debt, there is another $2.5 trillion or so in state and local debt, according to Federal Reserve figures. One of the biggest areas of liability is the pension payments owed to government workers. The states have been running a mad-scientist experiment in their pension funds, making huge promises but skipping the part where they sock away the money to pay for them. As budget cuts are made it will have a big impact on the economy. Take a look at what happened to Cisco this last quarter, all because of cutbacks at the local government level.
The problems of 2008 haven't gone away. We've just borrowed a lot more money to make people think everything would be okay. As the veneer wears off, this time it will be worse, because there's zero trust and confidence left in the government or the bankers.
I don't mean to sound pessimistic, and this is not to generate fear. We need not be afraid, but rather those who are prepared will thrive, and be well-positioned for the opportunities that await. Conversely, those who cling to the old system, hoping for a return to the carefree days of the past, will have their lives turned upside down, yet again. In 2011 you need to make sure that every area of your firm is being run in a very prudent way.
Post #510 – Tuesday, December 7, 2010
Firing On All Cylinders
 I just completed my latest one-day master class (Firing On All Cylinders) this past Wednesday for practice group leaders; this one held at The American Management Center in New York. Sponsored by Ark Conferences, this was the eighth consecutive workshop that I’ve had the honor of conducting.
Looking back, I see that I have now had the priviledge of training practice group leaders from over 60 law firms throughout the United States, often with multiple participants coming from the same firms. Amongst that group, I’m particularly pleased to have worked with practice leaders coming from 17 of the AmLaw 100 largest firms; including Greenberg Traurig, Kirkland & Ellis, Morgan Lewis, Sidley Austin, Weil Gotshal and Winston & Strawn.
Thank you all for allowing me to be of service.
Post # 509 – Friday, November 26, 2010
Where Leaders Stumble
 I’m currently collaborating with a colleague who is doing a lengthy research project attempting to identify the characteristics, traits and behaviors of the most effective law firm managing partners. In our most recent discussions he posed this question: “In firms you've observed where the managing partner isn't doing well or leadership is weak or dysfunctional, what one or two things do you find are the biggest or most common causes of failure?”
To provide a meaningful response, I went back through a decade worth of notes from training practice group leaders, scrutinized the results from the psychometric data that I have had over 50 new managing partners complete as part of the First 100 Days Program, and reflected upon what I’d observed in working with hundreds of law firms over a couple of decades. Here are some of the more common warning signs that I’ve observed in working with leaders at all levels:
• Displaying Arrogance
These are those leaders who just naturally expect to be admired, praised, indulged, and obeyed. They anticipate that they will be successful in everything they do, believe in their own legacy, and when their expectations are frustrated, they explode with "narcissistic rage." From my observer’s perspective, what is most distinctive about these leaders is their self-assurance which often gives them a certain presence—they are the first to speak in a group, and they do so with great confidence . . . even when they are wrong.
If you think you have all the answers and that your role as leader is basically to direct your peers as to what each should be doing; to assign each a specific project and dictate who will work on which, you may just be in for some critical push back. This leader stumbles whenever they begin to think that their colleagues need to serve them, as apposed to the leader serving his/her people. You need always to be willing to work along-side your people to get the job done. In other words there should be nothing in your practice group or firm that anyone else does, that you would not be willing to do yourself.
The very best leaders recognize that their role is to help those in their groups/firm, become even more successful in their careers than they would have had that leader not been in the picture.
• Suffering A Lack of Focus
This lack of focus can occur in several ways. Oftentimes, the leader unconsciously allows the urgent to crowd out the important and then eventually loses sight of what they are trying to accomplish that will advance the firm. Even more debilitating, the leader ends up trying to do too much or too many things at the same time, appearing to start one project, quickly losing interest, and then gravitating to the next ‘flavor-of-the-month.’
Suffering a lack of focus then disorients a leader and sets the stage for poor communication. These leaders delude themselves into believing that their colleagues can sense their goals and carry out their wishes without being told. When misunderstandings arise, they blame others for a lack of effort (or commitment) rather than recognizing their own negligence.
At the present moment, what is your primary focus? If you can't write it in a couple of short, pithy paragraphs, then your leadership suffers from a lack of clarity. Take the requisite time to center your focus on what's most important.
• Putting Paper Before People
Often leaders become so task orientated, that they forget to be people orientated. As a leader you can quickly become so consumed by the day-to-day requirements that all too often you make the mistake of seeing your partners more as interruptions than opportunities. As a leader your colleagues will always be seeking your attention, and that’s what you’ve got to give them.
Leadership is basically a people business. You can’t let paperwork and deadlines create a barrier between you and the opportunity to touch your colleague’s lives. So here’s the key: Never see your people as interruptions, because those kind of interruptions is your work. If your partners conclude that your day-to-day tasks are more important, they come to the conclusion that you don’t care about them. And there is a very old cliché that no leader should ever lose sight of . . . ‘People will never care how much you know, until they know how much you care.’
• Being Risk Adverse
The overly cautious leader is careful, conservative, and worried about making mistakes. Even positive feedback can be distorted or discounted. These individuals cannot seem to tolerate the unpleasant feelings associated with making a mistake; and as a result, they seek to avoid the unpredictable events related to decision-making. At their best, they are prudent and careful about evaluating risk; they rarely make rash or ill-advised moves, and they provide sound advice about intended courses of action. At their worst, however, they avoid innovation, resist change, stall, and drag their feet, even when it is apparent that something needs to be done.
These kinds of leaders fear failure far more than they desire success. Past success creates pressure: "Will I be able to sustain my past practicing performance in this new role?" When driven by the fear of failure, these leaders are unable to take reasonable risks. They limit themselves to tried and proven pathways. Any thoughts of trying to be innovative diminish and eventually disappear.
No progress has ever been made without new ideas being accepted and implemented. Leaders need to continually ask themselves: “Which is more important, the journey or the destination?” Are you still taking reasonable risks? Prudent leadership avoids reckless risk, but neither is it paralyzed by fear.
Poor leadership in good times can be hidden, but poor leadership in bad times is a recipe for disaster. The warning signs in life — from speed limits to prescription labels — are intended to protect us from disaster. As you consider these warnings of leadership failure, don't neglect taking an honest look at your situation.
The above represents my latest column for Slaw. Slaw identifies itself as “a cooperative weblog on all things legal.” Slaw has been publishing for five years and gets 30,000 unique visitors and about 100,000 visits every month. For the past two consecutive years it has been the winner of three different awards as the best legal blog. I’m honored to have been asked to become a regular columnist and invite you to comment on my latest meandering.
Post #508 – Wednesday, November 24, 2010
Developing a Profitable Practice in Asia
Given the relative slowdown in the European and North American legal markets; and the projected continuance of soft market conditions, the Asian legal market is increasingly taking on a more important role in the fortunes of western law firms. In Hong Kong alone, for example, the number of foreign law firms has doubled in the last few years as the city solidifies its position as a financial centre and a potential source of funds for the growing number of mainland Chinese companies expanding their businesses internationally. That said, without a clear strategy in place that reflects the unique cultural considerations of these regions, any expected rewards will not be achieved. And, there is only one guy in ALL of Asia who really knows the terrain and can guide you through . . .
 My good friend and strategic alliance partner, Robert Sawhney has just released his newest book entitled, Developing a Profitable Practice in Asia. Robert is the managing director and senior partner at SRC Associates Ltd, a Hong Kong based consulting firm that works throughout Asia with law and other professional service firms on their key strategy, marketing, internationalization and competitiveness issues. He has consulted for some of the leading professional service firms in places such as Hong Kong, Singapore, India, Vietnam and China. In addition to his consulting work Robert has written numerous articles for pre-eminent publications such as the Business Times (Singapore), Hong Kong Lawyer, Hong Kong Accountant, Managing Partner magazine (UK), Singapore Law Gazette, Law Dragon (US), Australian Law Management Journal, the Lawyer (UK), Hong Kong Economic Times and the ACCA Journal among many others.
 This text is packed with key case studies, crucial information and guidance, and will enable you to:
• Gain an understanding of the key legal markets in Asia (Vietnam, China, Japan, South Korea, Hong Kong, Singapore, Indonesia, Malaysia, India, Thailand, Taiwan);
• Identify the key players, investment trends and issues within these dynamic regions;
• Re-examine and strengthen your market-entry strategies;
• Navigate and forge successful strategic relationships;
• Understand the key factors that shape the competitive context of Asian legal markets;
• Enhance your firm’s own competitiveness, sustainability and value; and
• Optimize your firm’s Asian presence by implementing a ‘customized’ approach.
You can access more information about Bob’s new book – here. I sincerely recommend that if you have any interest in the Asian markets, that you get a copy of this text to serve as your guidebook; and then get ahold of Bob to serve as your guide.
Post #507 – Tuesday, November 23, 2010
What The Next Generation Law Firm Might Look Like
A number of journalists and sages have been contemplating what the next generation of law firm might look like . . .
 Imagine This Scenario: You begin your work day with a short (20 yard) commute to your home office. As you get comfortable at your desk, you enter through the secure web portal, and your digital workspace unfolds before you. The presence and availability of your colleagues is indicated to you, as yours is to them. You may begin your workday with a scan of your customized news feed for updates on your clients, practice areas, and colleagues. You follow this up by checking the real-time status of your active matters and inviting team members for a strategy session via an online video chat.
Your home office is fully supported by hub offices that provide comprehensive administrative and operational support. Such support includes full time reception and call routing services, mail service, and large scale copying and document preparation. Your fellow attorneys can access a variety of other administrative links from the portal. They can order office supplies and access external reference and research sites.
During the course of your workday client data, research, prior work product, and matter management tools are literally at your fingertips. Detailed profiles of each attorney’s experience, prior work history, current matters, team members with whom you have worked, education, publications, client successes, bar admissions and language abilities are searchable at any time. A “workload” gauge gives you and your colleagues appropriate information regarding any attorney’s availability and suitability for a particular assignment. The gauge includes factors that might play a role in the assignment, including the time zone in which the attorney lives, or whether they are full-time or part-time. Your fellow attorneys frame their work/life style electronically, through detailed use of calendars, so that their presence and availability is easily accessible to others.
By the end of the day, you have assembled research and knowledge assets from the database systems, updated documents, and facilitated an online client meeting with screen-sharing. Before logging out, you post a question to another practice group, update your workload status, and “walk” down the virtual hallway interface to tap one of your colleagues for advice on a new client matter. Your workday ended early today, due to a scheduled personal engagement, and you have set an alert to automatically send you a text message if the status of your active matters changes or a client message is received.
Your law firm charges clients much less than any other AmLaw 200 firm—probably about 50% less. This cost reduction is supported by the elimination of the partner profit model and all non-productive overhead. Additional major efficiencies come from some of the most advanced process engineering, information technology and Knowledge Management systems that have ever been applied to legal practice. The lawyers working with you on your client matters are senior-level attorneys drawn primarily from the ranks of the AmLaw 200 and from in-house legal departments of leading corporations. They are rewarded for their efficiency and client satisfaction, not according to a high billable hour quota. All of this results in a higher level of excellence at a much lower cost – a cost that has been budgeted with the client in advance.
This information has been drawn from documents that appear on the website of a different kind of law firm – www.clearspire.com Rather fascinating! Have a look for yourself at what your new competition might NOW look like.
COMMENT RECEIVED:
As opposed to a very good picture of what the present generation of law firm looks like - http://www.anonymouslawfirm.com. The lawyer profiles are excellent.
JLT, Partner, large regional firm.
Post #506 – Monday, November 15, 2010
What Future Law Firm Leaders Will Need
 The next generation of law firm leaders will need both business and people skills, as well as a thick skin, according to a survey of those currently in the job.
Ninety-two leaders of law firms with more than 100 lawyers responded to the survey (PDF) by law firm consultant Patrick McKenna, who teaches an annual class for new managing partners at the University of Chicago.
McKenna asked the respondents what skills and attributes are most needed for the next generation of law firm leaders. Some saw no difference in the skills needed by future and today’s leaders. Other popular answers predicted future leaders will need:
• Financial and business acumen, as well as strategic thinking skills, to handle increased competition and more rapid commoditization of legal services.
• Capacity to build consensus and bring about change, and to deliver tough love with compassion.
• Good interpersonal and communications skills.
• Courage, patience, a sense of humor, and “a thick skin to the point of having all nerve endings removed.”
• Serious dedication to the success of others.
McKenna tells the ABA Journal that the ability to oversee change is becoming more important in an era of outsourcing, alternative fees and virtual law firms. Those who see no difference in the characteristics needed now and in the future may be in a geographic area where legal fees are low and revenues are up, he says.
Or they may be “sadly delusional in hoping that their world will eventually return to normal,” he writes in an e-mail.
This Post was authored by Debra Cassens Weiss and appears on today's ABA Journal Law News Now
Post #505 – Monday, November 15, 2010
A Growing Industry Niche
I, frankly, wasn’t quite sure whether he really wanted to work or to play! When my son, David, was first recruited by an international video game development studio, all of my dreams of his one day working alongside Steven Spielberg were shattered. He rejected the film industry for what . . . video games? Well, that was some years back, and today he leads development projects, recruits notable actor and actresses to provide voice-overs (traveling back-and-forth between LA and Vancouver), and has engineered the sound on award-winning games (Best Developer, IGN.com Best of 2006 Awards).
I mention that because somewhere in the last decade video game releases surpasses box office film releases to announce that video gaming has now become a major industry niche. By way of example, in this past week, one new game sold 5.6 million copies (US $360 million in revenues) in the first 24-hours after its release.
Industry observer Scott Steinberg claims, “I think it is fair to say at this point that video games have not only equaled but surpassed Hollywood in many ways. Games have started not only to exceed what we would expect from blockbuster entertainment experiences but completely knock them out of the water.”
Apparently the video game industry has been growing by about 10% year over year (in spite of the economic slowdown) and is now a $10 Billion a year business – quite similar to movie box office revenues. At the same time, modern gaming technology is making the development process nearly as expensive as making a film. “US$30-million to US$40-million is not unheard of [in game production],” Steinberg tells us. He points to the example of Grand Theft Auto 4, which developer, Rockstar North Ltd., had to hire more than 1,000 people to build over 3 years, at a cost exceeding US$100-million.
Meanwhile, business has never been better for (those few) lawyers doing video-game law, in any of its varied manifestations. Lawyers working in the video-game industry occupy a variety of roles and perform a variety of tasks, ranging from IP work to First Amendment litigation. These lawyers describe the video-game industry as being similar to the music and movie businesses in that like record labels and movie studios, developers finance projects they believe have a chance of success.
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