You say you want a revolution?

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If you’ve been reading my blog for a while, you’ll know that I’m convinced of a couple of things: (1) Fundamental shifts in the legal services environment will spawn a  diverse population of new providers that will expand access to those services while destroying lawyers’ market exclusivity; and, (2) This is, on balance, a good thing. I’ve never been more certain than I am today, at the close of 2013, about the first — but I’ve never been less certain about the second.

I’ve contributed a few thoughts recently about the state of the legal market to Lexis-Nexis, JD Supra, and the CBA’s National magazine, among others. My basic message is the same throughout: we’re no longer predicting a new legal future, we’re living in a new legal present.

And yet I still see people in this industry asking, “Where’s the revolution? When is the change going to come?” Folks, the change is here. We’re living it. Cast your mind back five years, when Richard Susskind had just published The End Of Lawyers?, and ask if you thought this much upheaval and advancement and innovation was possible in such a short period. Cast it back 10 years, when the blawgosphere barely existed, and ask the same. The legal market is becoming more diverse and more accessible every year; legal services are more affordable and more predictably priced every year.

Most importantly, the pace of that change is accelerating. More new things happened in this market in 2013 than in 2012. More happened in 2012 than in 2011, in 2011 than in 2010, and so on. Alternatives to the traditional — in terms of service providers, business models, workflow systems, delivery vehicles, pricing strategies, and so on — are becoming normalized; that is, they’re spoken of less frequently as “alternative” and more frequently as simply another option. We don’t even talk about the “new normal” as much — it’s all becoming normal. These are not the signs of change in retreat; these are the signs of change becoming mainstream — ceasing to be “change” and starting to become “the way things are.”

The normalization of alternatives comes at a steep price to the incumbents, and I’m aware of that. Lawyers have it tough right now, tougher than most of us have ever experienced, and I’m sorry to say it’s going to get worse before it gets better. I don’t take that lightly. But clients have it better already — better than they’ve had it before, in terms of knowledge and access and choice and affordability, with the prospect of much better yet to come. And at the end of the day, as much as I care about lawyers, I care about clients more, because they’re the reason we’re here: to help them use the law to reach their goals, enhance their dignity, and better their lives.

So what’s the problem? Why am I suddenly also concerned about whether all this change will, in fact, be a good thing? Because while I hope and trust that the traditional legal market will fall away and that a better one will replace it,  I’m increasingly alive to another possibility — that the traditional legal market may fall away, and nothing will replace it.

One of my very few hobbies is geopolitics (yes, I know I need to get out more often). I’m a dabbler in this field at best, but I’ve had an interest for many years, and I still remember what I was thinking on the day the Berlin Wall came down. Certainly those were extraordinary images and wonderful times, a lifetime marker for the generations that helped bring it about or watched it happen. But what was going through my mind, watching the Wall come down and totalitarian governments all over eastern Europe collapse with it, was: This is happening too fast. Corrupt, decrepit regimes were falling over like dead trees in a windstorm, but in many cases, there was nothing — no replacement regime, no legitimate constitution, no rule of law — to step into the breach. Some of these countries, to their great credit, grew reasonably healthy liberal democracies out of the rubble. Many did not.

Evolutionary Road

George Friedman has observed, accurately, that the people who start revolutions are often not the people who finish them, and that revolutions do not always end up where their instigators hoped they would. I think it’s fair to say that we’re at the start of a revolution in the legal services market. That should be, and is, exhilarating. But it should also summon us to the barricades to make sure that, if the incumbent regime falls, looting and chaos are not the immediate outcome and the lasting legacy.

If you want an example, take a look at law schools. You’re probably aware that applications to US law schools have been dropping like a stone and that enrolment is now down to its lowest level since 1977. As Bruce MacEwen notes (and as I’ve been saying for some time now), this story has only one ending: many American law schools will close or will become so small as to turn into veritable cottage businesses. There’s no question that there are too many law schools providing too little value to their students and to the clients they’ll someday struggle to serve, and that a major correction is overdue here. There’s also a lot of schadenfreude throughout the profession right now as these schools wriggle on the hook.

We can hope for and work towards a renaissance and reinvention of law school. But what if that fails? What if 80% of US law schools close and are not replaced? Will the profession and the public be well served by a legal education system that features Harvard, Yale, Stanford and a few other clones, and nobody else? Or what if the failed law schools are followed by profiteering private law degree factories that replace the passive academic lecture with cookie-cutter “practical training” packages bereft of jurisprudence and professionalism? I think this is an unlikely outcome. But it is a possible outcome — a possibility that didn’t exist 10 years ago, but does today.

Or take a much bigger and broader example: the legal profession itself. This blog contains six years’ worth of mounting criticism of lawyers and warnings of dire consequences should opportunities for reform be ignored too long. But it also contains staunch defences of the inherent value of lawyers as expert counsellors to troubled clients and defenders of the rule of law. Lawyers are both desirable and necessary. But we’ve exploited our protected and prestigious position in this market for so long that an over-correction is now possible — not lawyer reform, but outright lawyer rejection. Alternatives to lawyers, as I’ve detailed above, are here and are flourishing, and we’ve encouraged them to develop by our failure to fully serve the market. These alternatives should complement us, not replace us. But it might not work out that way.

Let me be clear: I’m not backtracking, not one inch, on my belief that this market needs serious, structural reform, that access to legal services must be expanded and improved, and that lawyers should be playing different (but still important) roles in this market than we do today. Don’t mistake the foregoing for the kind of fear-mongering employed by protectionists and lawyer exceptionalists to beat back change in their own interest. Instead, this is a call for the legal profession to recognize that change is really happening — and that we now need to throw our efforts into trying to manage, to the extent possible, the enormously strong forces coming into play.

How can we avoid the worse- and even worst-case scenarios? How do we manage the effects of revolutionary forces? This has to be a collective effort — everyone in the legal profession and its associated institutions has to play a part. Here are my recommendations.

1. Regulators must lead the way by recognizing these trends and staying well ahead of them. Every regulatory activity and initiative must clearly enhance either access to legal services or lawyers’ professional standards. Every barrier to “non-lawyer” entry to the marketplace must be immediately examined and, unless objectively justifiable in the public interest, set aside. The self-governance of lawyers in the public interest must be protected and prioritized. Regulators that spend their time on trivia, such as declaring lawyer blogs to be improper advertising, are running enormous risks in a market environment this volatile.

2. Bar Associations must promote the value and professionalism of lawyers in a crowded market. Forget about any efforts to keep “non-lawyers” off our turf; that battle is over, and we lost. Now is the time to create “image campaigns” that tell clients, not why we want to law school, but why a lawyer’s ethics, professionalism, expertise, reliability and integrity are worth the premium that we inevitably will cost. These are marketing campaigns that communicate the extraordinary value that a lawyer brings — while recognizing and readily conceding that not every situation requires a lawyer’s services.

3. Law Schools must preserve and promote the importance of professional values in legal education. Those schools that survive the coming purge will be under enormous pressure to provide “practical,” “real world” training and clinical opportunities, and so they should. But they must also recognize and embrace their role as the incubator of ethics and professionalism, because the competitors that will emerge in the education and training space likely will not care about these facets of the future market as much as law schools do or ought. Law schools will provide lawyer training simply to survive in this market; they must also provide the primary foundations of ethical lawyer behaviour.

4. Courts must recognize that their traditional role as the arbiter of private legal disputes is in mortal danger. Ninety-eight percent of disputes never see the inside of a courtroom, and 90% of all disputes never even enter the process. Courts are utterly agonizing to many of the people who use them and utterly irrelevant to all those who cannot; this is a short road to disaster. Train staff to help self-represented litigants, because they will shortly and permanently outnumber lawyers; deputize senior lawyers to resolve conflicts locally; institute ODR services affiliated with courts’ enforcement powers. Above all, rip off the blinders and recognize how close you are to the edge of the chasm.

5. Lawyers must accept and act upon a single new reality: we cannot continue to make a living in the law the way we used to. Full stop. We must create sustainable cost advantages through adoption of technologies and processes. We must cede to new competitors work that we cannot do as efficiently, effectively and profitably as they can, forming partnerships where appropriate to integrate services in a complementary fashion. We must learn to price rationally, fairly, and predictably. We must remember and pursue the true purpose of law. Above all, we must resist every temptation, no matter how small or how great, to compromise our ethics and professional stature for any business reason. These will soon be our sole competitive advantages.

Revolutions are powerful, frightening, and unpredictable things. Once they’re really underway, they can’t be controlled or directed. Market revolutions are less violent and bloody than political ones, but they can be just as destructive. In times of revolution, you figure out very quickly just what it is you need to really safeguard. I believe we need to safeguard the rule of law, the independence of the profession, and the fundamental values to which lawyers have always sworn oaths. Everything else is replaceable or negotiable; these are not.

In 2014, the revolution in the legal market will continue to foment, to bubble away, to push in from the edges and from underneath. One of these days, it will break out in full, and it will be a wonder and a terror to behold. I truly don’t know when that’s going to happen. But I do know that if we want there to be a viable legal profession afterwards, we need to act now — to lock down and preserve the critical few things that we really, truly can’t afford to lose.

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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15 Responses to “You say you want a revolution?”

  1. Marc Lauritsen

    Few industries – or regimes – are good at countering their demise, once underway, in part because the forces at play drain them of the needed energy and insight. We can take some solace in the fact that many of the disruptive new players are being led by lawyers who take the fundamental values of the profession seriously. And that at least some law schools have begun to react appropriately to the shock wave. But I share your sense of real danger if awareness of these trends isn’t more broadly intensified.

  2. George Beaton

    Great post to close 2013 Jordan. The most compelling question for me is why so very few BigLaw firms seem to be aware of, let alone, acting on these trends. in my forthcoming book I plan to explore the psychological and sociological aspects of this phenomenon.

    Thank you to for your contribution to NewLaw New Rules, my just published e-book based on a thread that’s grown to nearly 40,000 words, related posts and selected tweets. A link is at http://www.beatoncapital.com/2013/12/one-first-read-newlaw-new-rules/.

    Best wishes for Christmas. George

  3. Martin Tlison

    Jordan, the buyers always win. With the technology advances in monitoring, measuring and management software at the finger tips of General Counsels, the demand for efficient project pricing is the norm. You are right that change is happening and many large firms do not get it. Some boutique specialties can survive at higher prices for awhile but still need to project price the work.

    Many lawyers who need to be fed will find less on the plate, and project competition will increase for those that must get the work. I note that during the recession, many litigators rose to the top as managing partners because they had business and corporate did not. They have been insulated from the pain, and not making the necessary changes.

    Some lawyers think they can glide along for a while based on relationships with the GCs at mid-to large clients , but the CEO and CFO are knocking on the door of the GC buyer to demand better ROI by reducing budgets. Those with heads in the sand will see their practices diminish. We only have to look at the doctors and medical care over the last 25 years to see a pattern of what happens when you do not change things yourself, and allow government and providers to make the change. Another warning is that some lawyers in their late 50’s and early 60’s are pushing the envelope to keep doing the same thing as long as they can ,but those in their forties should be losing sleep and pushing for structure and system change.

    We did it to ourselves by fostering a flawed and inefficient associate system that rewarded performance by billing more hours and never taught them how to provide value, then they grew up ,and did more of the same as partners.
    Happy Holidays

  4. Legaldisruption

    I tend to agree with Jordan on his observations and insights into the legal industry but the remedies being proposed here are utter nonsense. Professionalism will not save the industry. That’s like Kodak complaining about how clear chemically produced pictures are compared to pixels, when in fact the quality how very little to do with why they eventually failed. It was the economics of the offering that mattered. Axiom Law is a good example. Axiom hires Biglaw lawyers but because they recognized the economic failures of the partnership model they embraced the corporate model and have embraced the free lance movement early on. The legal industry is just going through a transformation to more sustainable models of business. Promoting professionalism won’t save anyone. Investing in the disrupters or partnering with them might save a few members of Oldlaw. The majority of Oldlaw members are not capable of changing their business models, like most other incumbents, due to entrenched interests.

    Jordan seems to have fallen into the trap which Clayton Christensen has spoken of much less infrequently, than the other principles of disruption theory. Incumbents often don’t embrace disrupters because they have different metrics
    for value and performance. Professionalism might be valued in Oldlaw but Newlaw prizes efficiency and innovation. This is just a portion of the differences but they are quite pivotal to why Newlaw business models will succeed and Oldlaw will slowly die off. Professionalism is elitist and remains a niche value. Society primarily wants affordability which can only come through efficient operations that must embrace innovation in order to sustain internet future.

  5. Paula Marie Young

    I am posting a link to this discussion on my blog, The Red Velvet Lawyer,http://the-red-velvet-lawyer.blogspot.com/

    You summarize the trends in a way I have not seen since Susskind’s most recent book, and you express appropriate urgency. I appreciate the attempt to predict the future and your effort to suggest a few adaptive strategies. I am not hopeful that the regulators or bar associations will respond as you ask. As I noted in a recent blog, the ABA is still accrediting law schools while experts predict 20 may fail as the market adjusts.

  6. D. Casey Flaherty

    I wrote recently that a theme I am looking to develop next year starts with the observation that, “In the industrial economy, the person who wins is the expert. In the knowledge economy, the person who wins is the one who has the process to solve complex problems.” I like the quote. But it misses the role of experts in creating the processes to solve complex problems. I am keen to push back on the framing of legal practice being commoditized; I prefer to discuss system building, commoditization’s expert- and technology-driven prerequisite. In that context, professionalism still matters. Document automation may make it feasible for an enterprise to avoid turning to a lawyer for every contract. But the quality of the template and questionnaire still matter. Indeed, because they may receive less review and less scrutiny than a bespoke contract while being used more frequently, their quality probably matters more. Getting it right is paramount. This, of course, is not any kind of argument against document automation or any other innovation.

  7. Legaldisruption

    To clarify my earlier opinions on professionalism, I mean the practice of being licensed by a regulatory board that professes to hold it’s members to ethical standards and regulates entry into an industry. Rather then letting the free market decide which businesses should survive these governing bodies feel that the public is incapable of determing quality and must protect them from their ignorance by restricting supply of prospective entrants into the industry. The problem is that market forces are much more efficient and effective at meeting the quality levels demanded by the industry customers than tests, licensing programs, or ethics rules could ever be. By restricting supply competition is reduced, innovation is repressed, and an artificial scarcity is created leading to unjustified premiums being paid by the market.

    Unethical businesses more often than not fail; with the reputation systems available to the public today online they are even more likely to fail than in previous generations. The damage that can be inflicted on these businesses from negative reviews and the laws with their enforcement systems already in place through the government punishing fraud are sufficient to incentive businesses to act ethically in their services/products provided to the public. Thus the alternative providers of legal services have every incentive to act just as ethical, even more so, as traditional legal service providers.

    The premium for professionalism as described by Jordan is “nonsense” to me because as stated all businesses are highly incensed by free market competition to provide ethical services or face forms of punishment provided by the market and the government. Thus having law schools or the professional bodies attempt to thwart the rise of alternative providers through requirement of more rigid ethical standards by traditional providers or increased promotion of ethics seems all but futile since all businesses have the incentive to be as ethical as the public demands. It’s not a substantial “competitive advantage”.

    Jordan is quite right on a few points which I may have characterized as nonsense in my generalization of his recommendations. The courts do need to prepare for increases in litigants not represented by counsel and recognize the threat ODR poses to their business. Lawyers do need to utilize more technology now available.

  8. Noah Waisberg - DiligenceEngine

    Strongly agree with Casey’s comment.

    One of the great opportunities offered by increased use of process and technology is to spread high quality legal work more widely. Currently, much legal work (e.g., drafting and reviewing contracts) gets done by junior people who may be smart but still have a lot to learn. Senior lawyers do not have the time to review every word, and many tasks are not worth what it would cost to have them pay real attention to them. That said, this low-end work really matters. Inappropriate boilerplate in drafting, busted cross references, or missed change of control provisions in diligence can make a significant impact. Improved process and some new technology can help distribute experienced lawyer work and attention into areas it was previously uneconomic to reach.

    Some (but definitely not all) lawyer automation tech companies are highly focussed in spreading high quality lawyering more broadly. A few examples:

    Koncision is a document automation offering by drafting expert Ken Adams. It allows non-expert users to get top quality contracts generated from a template.
    Recent study results on eDiscovery review approaches show that a single senior-level attorney using technology outperformed teams of less expert reviewers using technology (and has previously been shown to be more accurate than pure non-expert review). A key takeaway was that “Software is only as good as its operators. Human contribution is the most significant element.”
    – We make sure that every contract provision used to train our contract provision extraction software was reviewed by an experienced attorney.

    Jordan is right that it is unclear how the changes to the legal market will shake out. It is cheaper and easier for technology vendors to use non-experts in building their systems, some do, and work product will not be better if these providers win. Document automation systems, technology assisted review eDiscovery software or automated contract provision extraction systems are only as good as their inputs. Garbage in, garbage out.

  9. D. Casey Flaherty

    I am more in Jordan’s camp–i.e., less sanguine than you about “the market” providing proper incentives for ethical behavior. But I do share your cynicism re occupational licensing regimes as a mechanism for insulating incumbent stakeholders from competition. Which is to say, I don’t have the answer. The status quo is bad. The New Normal could and should, on net, be better in the long run, though not necessarily. But in the long run we’re….well, you know.

  10. Wesley Todd

    I think Jordan and each person commenting raised great points.

    The revolution is here – I just left a stable and successful job to create a web-based software solution for streamlining the communication and document production services for insurers and their attorneys. While there are tons of obstacles, the opportunity to make it a success undoubtedly exists. I took this risk because of people like Jordan and some of the other analysts whom commented. The more this group continues to provide specifics and inspiration, and the more they make this information available to everyone, the more you will see people like me take risks to solve inefficiencies.

    My only specific comment is: who cares if lawyers do not lead this revolution? It would serve us right for allowing these inefficiencies to last so long. As noted in the comments, even in this scenario where nonlawyers are the primary beneficiaries of the changes, nonlawyers will still need to hire some (how many will they hire is the real question) subject matter expert lawyers to save time, money, and mistakes in producing the new systems. So, to Jordan’s point, some lawyers will have to be involved, but they better act quick. That’s the urgency I felt when I decided to jump ship.

    Thanks to all of you; especially you, Jordan!

  11. Van Law

    “Independent paralegals are licensed by law societies or on the way there in four Canadian provinces…” I expect to see a lot more of this type of entity in Canada.

  12. David Luther Woodward

    Perhaps we can have the same sort of revolution in the medical industry: no universal health care system will ever work in this country as long as the medical establishment control entry into the market. Concomitantly, the minute we, the Bar, allow alternate legal services we have lost control, and hence any oligopolistic profits. Martin Mayer–in his book about lawyers published over 25 years ago–basically said that lawyers are the only people who will shoot themselves in the foot to extend the right of legal education, and hence practice, to everyone.

  13. Fred Headon

    Well put (as usual!), Jordan. Change is taking hold and will not be loosening its grip. I also agree with the focus you remind us we need to keep – helping people avoid and resolve their disputes fairly. That takes training, professionalism, ethics and likely many other attributes. But how clients expect help to be delivered – that has changed significantly and unless we keep up, the kind of vacuum you describe may well take hold. Glad to hear a voice such as yours reminding us of this.

  14. Byron

    The more things change, the more they stay the same. When you throw out the outliers and the idiots (of which you clearly are not one), we’re all kind of right. Sure, we’re in the middle of a revolution. The only thing is, it’s not so revolutionary.

    1. People are expensive. Less of them working for you is good for the clients bills.
    2. Money, even at wealthy corporations, gets tighter every year. That means more analysis of expenses, especially when revenues cannot be grown.
    3. That means lower bills so GC’s can keep their jobs.
    4. Except when success means the GC keeping their job, then get the best. The best continue to get more expensive.
    5. Therefore, the routine work gets less expensive b/c technology eliminates jobs in boring ways like ediscovery and outsourced doc review.

    Where’s the revolution? Ask a lawyer in practice for 30+ what he (yes, pretty much “he”) thinks about email, ediscovery, non employee lawyers doing work for prized clients, and automated time keeping. Yep, it’s a revolution.

    But people and companies still need trusted advisors with specialized knowledge and specialized relationships. Don’t all people, everywhere, all the time?

    Maybe the point isn’t that the practice of law has changed or will change so significantly, but that we never properly defined what it means to be a lawyer.

    If technology (hardware and software) can take your job, it will. Some parts of lawyers’ work will be taken under this principal, other parts will not. Which are which is what we’re figuring out.

    Do not be fooled into believing the future looks anything like the present, however. http://www.ted.com/talks/ray_kurzweil_on_how_technology_will_transform_us

  15. Brock Wimerbely

    I would agree that there is a revolution taking place in the legal professional business. However, is this not the same revolution that is taking place in any other profession as of late? The professional landscape as a whole is changing and it would be unwise to categorize it to certain professions. I believe that it is a time of panic, but the job market always turns around.

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