The confidence of the dinosaurs

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“When the platform changes, the leaders change.”Seth Godin

You’ve seen the same signs I have. The volume of pro se litigation continues to set new records every year, most notably in family law. Do-it-yourself websites for contracts, wills and divorces keep flourishing, with non-lawyer providers like LegalZoom and Rocket Lawyer boasting millions of customers and millions of dollars in venture capital investment. Foreign professionals and sophisticated software are surging onto lawyers’ traditional business turf. These trends and others show every indication of continuing throughout this coming decade.

The overall legal market, despite what you might conclude from all that data, is actually strong and growing. But as Toby Brown has noted, it’s growing with only minimal involvement by or financial gain for lawyers. Market growth is passing us by. Law firms of every size and description, in every jurisdiction, are experiencing flat or declining revenue or profit. This is mainly because lawyers and law firms have proven to be less accessible, more expensive, and less responsive than clients are increasingly willing or able to tolerate, and because those clients are now test-driving alternative options for legal services.

That’s fairly easy to understand. What’s not so easy to understand is why most lawyers haven’t responded to this emerging reality. More and more, month by month, the market is acting in new and unfamiliar ways that don’t follow the traditional script. Yet most of us keep acting as if nothing has really changed, or as if the change that we do perceive is merely minor and fleeting. We choose to ignore the growing evidence of new behavioural patterns among our clients.

The only reason I can think of to explain this is the serene confidence of incumbency. Lawyers still own this market, and we’ve owned it for longer than anyone can remember, a happy fact that we ascribe to our natural superiority. We feel a deep and untroubled assurance of our continued dominance over legal services.

Well, this is a bad time to be an incumbent in the legal marketplace.

If you or your firm or your organization or your model have been riding high in this market for years or decades, then a time of reckoning is at hand. Fundamental changes in the market for legal products and services are driving profound changes in the behaviour of legal service purchasers and other market participants. Those changes are coming to constitute a new environment, a fresh playing field, a new set of rules for legal service providers.

That’s a serious challenge. And it is especially a challenge to the providers and institutions that have long occupied the market’s pole positions — the perennial winners, the default choices, the clubhouse leaders. That is not limited to lawyers and law firms — it’s market-wide.

  • In-house counsel have been trying the patience of their corporate colleagues for years, through their inability to bring predictability, control, and budgetary discipline to the legal risk management function. That patience has run out in many companies, which are turning to procurement professionals to deliver the results the CEO and CFO want. Some corporate counsel have found themselves being “worked around” by their own employers.
  • Courts and judges have served as the ultimate arbiters of private disputes for centuries. But the ongoing, long-term breakdown of the litigation system has generated a host of alternative options for private dispute resolution, from familiar options like mediation and arbitration to newer entrants like online DR and game-theory-based dispute elimination. Courts are well on their way to becoming a largely irrelevant niche player in this market, their time consumed by cranks and corporations.
  • Law schools, for the 150+ years following the legal profession’s post-apprentice period, served as the only route into a legal career. This market monopoly, combined with academia’s natural inclination towards inertia, has made schools fanatically resistant to change. But the collapse of the traditional lawyer employment route is hitting schools hard; the 25% drop in applicants to US law schools over the past two years is just the leading indicator of trouble.
  • Legal publishers saw this trend coming sooner than most: the evisceration of print publishing by online technology forced these companies to begin expanding into areas like online research and knowledge management. But even with that head start, giants like Lexis and West face challenges from new companies like Bloomberg Law, new collectives like Legal Information Institutes, and down the road, consumer information leviathans like Google.
  • Bar associations were integral to the development of an organized profession and collective lawyer activity. But like other aging non-profits, many became more fixated on their own interests than on those of their members, and they came to prioritize the interests of their most influential volunteers. Worse, niche competitors began replicating their core offerings — networking, education, content — leaving bar associations struggling for purpose and identity.

It bears repeating: these are the winners we’re talking about. These are the companies, organizations and professionals that defeated other contenders over the course of many decades by developing models that delivered top performance in their respective environments. They’ve been around for so long that we (and, dangerously, perhaps they) assume that their dominance is natural. But it’s not; it’s environmental. They adapted best to their prevailing circumstances, and they did it so well and so completely that now, as their natural habitat begins to break down, they’re finding it harder to breathe.

These front-runners are highly vulnerable precisely by virtue of their front-running status. Their infrastructure, business culture and operating assumptions are inextricably linked to the status quo prevalent during their formative years; they flourished by adapting to these first environments they encountered. As those environments change, incumbents must find their way in a world for which they are increasingly not suited. This is the fundamental, and most frightening, insight that Clayton Christensen delivers in The Innovator’s Dilemma: industry leaders are regularly overthrown because their operating models could not adapt to their industry’s inevitable evolutions and innovations.

If you are or belong to a successful legal market participant today, it is most likely the case that your organization adapted to (and perhaps even helped bring about) the ideal environment for its success. What will you do when that environment changes?

  • If your entire business model is premised on pricing your services and paying your lawyers according to time spent on tasks, what do you do when clients stop dealing in that currency and demand a new one?
  • If your sole stock in trade is students who spend three years receiving basic law primers, what do you when both your inventory and its purchasers require a radically different product?
  • If your core purpose is to resolve private disputes, what do you do when new providers deliver the same outcomes much faster and much more cheaply than you could hope to manage?

Dinosaurs, to borrow a popular analogy often used to describe traditional lawyers, dominated the Mesozoic Era because they were perfectly suited to the world as they found it. Then the asteroid hit. But the asteroid didn’t kill every dinosaur in the world upon impact — it couldn’t; it wasn’t that big. What the asteroid did was cause extreme disruption to the environment in which the dinosaurs had evolved. The world around them changed, and the dinosaurs couldn’t adjust, and they disappeared.

What do you suppose is going to happen next in the law?

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

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3 Responses to “The confidence of the dinosaurs”

  1. Jon Busby

    Interesting post.

    To pick up on Godin’s quote I think the thing lawyers fail at is strategic organisation and leadership.

    Behind the law firm facade things are fragmented, disjointed even dysfunctional. Partner versus partner, department versus department. The hunger for work is often at the expense of thinking through the value, the ROI…even rejecting it on commercial grounds in the ‘hit and hope’ strategy that it may just come good. Other organisations think opportunities through and reject. Law firms do this less.

    Incumbency has bred apathy and complacency, assumption and dismissal of alternatives because the culture in-breeds that for many.

    People stand up at conferences to endlessly talk up the future, blog about it, Tweet about it…but still little changes. The constant variations on a theme, repackaged, re PowerPointed, re branded…but still little changes.

    There will be no big bang. That is just another over hyped noise in a market already full of the over hype. Instead it will be a slow drowning of the inefficient, the incompetent, the inept, the lazy and the closed. So slow in fact they won’t even notice it. All driven by that unique human quality…the pursuit of better.

    My advice for those that want to survive? Be open to the new. Kick it, test it, challenge it. You have the right to do that. Be open to collaborating with proven experts. Communicate your fears, your worries, your concerns but also your dreams, your hopes…what YOU want. Build trust, find out, then execute.

    Jon

  2. marc romano - ignyte

    Jordan,

    I am relieved to read your piece which you posted on LegalonRamp. I just recently posted a pie titled “I don’t give a damn” the title, quoting a comment to me from a firm’s managing partner. I was concerned that the piece was far too critical for the site and its members. Apparently not.

    I enjoyed this very much and support every point made.

    Thank you for a great piece.

    Marc Romano – Ignyte

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