A crowded legal marketplace requires law firms to do more than just provide quality legal services

If the propriators of Asian businesses from 1917 were to board a time machine (likely built by Elon Musk) and travel to 2017 they would be astounded by the massive advances to transportation, communication and the like. And while all those changes might be confusing to them, one thing that they wouldn’t be confused by is how legal services are delivered in 2017. Legal services has seen very little of the transformation that other industries have experienced.

This is because legal services has been unnaturally shielded from change by protectionist barriers that allow lawyers to play by a set of economic principles that don’t apply to other industries. To date, the success of traditional lawyers has rested almost entirely upon three pillars: a perpetually high desire for legal services to be provided in the traditional, labour-intensive manner; a marketplace wary of non-traditional providers; and clients that aren’t cost-sensitive. Unfortunately all three of those pillars are experiencing significant erosion.

As a result, the road ahead for traditional law firms is no longer straight, smooth or predictable. A growing body of evidence suggests that demand for legal services from traditional law firms is flattening. The “more for less” challenge that corporate clients face is often resolved by building internal legal teams to avoid sending work to law firms, or by disaggregating legal work among different, non-law firm players in the marketplace. Legal technology continues to show promise at eliminating some of the work that lawyers have traditionally done. Moreover, technology combined with process and workflow allows those who didn’t go to law school to do more higher value legal work than ever before.

More and more legal service providers are being forced to offer a unique client experience – one that cannot be easily duplicated, to gain market differentiation and competitive advantage. In order to do that, they need to view legal services through a different lens. A lens that focuses on output, rather than input: a lens that forces providers to assemble the best combination of people, process, and technology so as to achieve that output, regardless of the weighting within the mix. In other words, market leaders of the legal services industry of 2025 will be those that take an enterprise approach to legal services – those who see law as a team sport. Such an approach is grounded in a philosophy that believes that lawyers are an important piece of the puzzle, but they are not the entire puzzle. As such, opportunities for non-legally trained staff within legal service providers will increase dramatically, and the old lawyer-dominated hierarchies within them will begin to crumble.

A global phenomenon

Currently, the hottest thing in North American legal service innovation is legal technology; such as artificial intelligence and machine learning applications like ROSS or Kira, or data analytics programs like Loom, Premonition and Lex Machina, expert systems like Neota Logic and BlueJ Legal, or even smarter and more flexible document assembly programs like Contract Express.

These new products are created and driven by a Millennial generation that sees legal services as in need of repair. Successful lawyers of the 2020s will augment their practices with these products so as to provide a better, faster, more accurate and less expensive legal services. In the past, jurisdication and language served to insulate lawyers in Asia from global pressures. However, none of the new generation of legal tech products are jurisdiction specific, and some are not even language specific. They are globally relevant and capable of use around the world. Their successes have normalised the idea that technology has a very important role to play in legal services and this will only encourage even more entrepreneurs around the globe to become the next big legal tech success story.

Interestingly, these new legal technologies by themselves, do not cause change. For them, there isn’t any iPhone or iPod moment, where they launch and the market suddenly shifts to use their products. Many legal technology companies have assumed that since they have a great product, law firms will immediately see the competitive advantage of using the product and start buying it. But that is exception, not the rule. Most legal technology sales success happens by selling law firm clients on the value of the technology. If clients are impressed with a technology, they usually demand that their law firms use it – to provide better service and to lower costs.

Process, Process, Process

There are other innovations in legal services which can provide unique client experiences but which are not technology driven. Surprisingly, only a very small number of firms understand the value of continuous process improvement – firms that have adopted a disciplined approach to critically assess what is being done and why, based on the methods of Lean and Six Sigma. These firms have reduced timelines and errors to provide cost-effective quality legal services for clients. Even fewer firms have applied Lean thinking to their processes in combination with workflow that allows non-legally trained team members to work on higher value work.

Stand out or fade out

Whether lawyers like it or not, by necessity, legal services will gradually transform from a lawyer-dominated service to an entity-driven service dominated by people, process and technology; a service that is merely augmented by lawyers. It’s the dawning of a new era of legal services as a team sport.

This article is a follow-up to the Legal Innovation and Tech Forum which took place in Hong Kong on June 8, 2017.  Mitch Kowalski can be reached at www.kowalski.ca or follow him on twitter @mekowalski.

Posted by Mitch Kowalski

Mitch Kowalski is an author, advisor and innovator in the global legal services industry.

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