The 21st-century solo

(Author’s note: Read to the end to learn about a scholarship contest for sole practitioners.) During my recent webinar on legal marketplace trends with Susan Cartier Liebel of Solo Practice University, I raised a point about solo law practice that’s been bothering me for a while.

Almost every lawyers’ association in North America, I noted, has a section devoted to “Solo, Small-Firm and General Practice” lawyers. My problem with that category is that it still lumps together two groups — solo and small firm lawyers, and general practice lawyers — that should now be considered separately. Today’s (and especially tomorrow’s) sole practitioner has to pursue a niched, specialized practice — one that offers a focused set of skills and expertise with which to compete in an extremely fractured and specialized marketplace. If anything, I argued, today’s “general practitioners” are in fact the national and global giants — the full-service firms who assure the marketplace that “we do everything.” The traditional roles have been reversed.

This reversal is part of what I think we can justifiably call a “paradigm shift” for the solo bar — a change in its underlying assumptions and realities. Sole practitioners (for the purposes of this post, I’ll risk a charge of hypocrisy and bundle “very small firms” under the same term) have been accustomed to viewing themselves in a certain light, a view that the rest of the bar has shared and encouraged: the jack-of-all-trades, the storefront attorney, the low-cost but personal-touch underdog. This view of solos directly contrasts them with bigger law firms: we are more flexible, more affordable, and more personal. The flip side of that contrast, of course, is that solos are viewed as less specialized, less sophisticated and less able to take on big tasks.

Many solos have long been content with this trade-off.  Not only that, many have welcomed the current upheaval in the market that has caused bigger firms so much heartburn. We’re now poised, they say, to take in those price-conscious, relationship-hungry clients who’ve left the giants — this is our time.

To which I reply: not so fast. Solos are not exempt from the revolution. Everyone else in this market — big firms, mid-size firms, corporate clients, consumer clients, law schools, legal publishers and many others — is being transformed by the crucible of these times. Solos will prove to be no different. Taking advantage of this new market will require solos to change as well, which will mean abandoning some long-held habits and identities.

Here’s what I see as four characteristics of the successful 21st-century sole practitioner.

1. Specialized. I mentioned this at the outset, but it bears repeating. “General practice,” in real terms, has traditionally encompassed a range of product and service offerings that today have become economically unfeasible for lawyers. Real estate transactions, straightforward wills, contract drafting, incorporation and other basic business law services, and so forth — these are the stock in trade of the online, automated, or para-professional providers now accelerating into the market. This type of work has never paid handsomely, but in future, it will rarely pay enough to justify a lawyer’s efforts. Running a general practice has usually meant being good at a broad yet shallow range of services; but the shallow waters are precisely those into which the new competitors have advanced.

The solution for solos is to go deeper and develop specialties. Yes, as you give up a wide swath of your current broad practice, you will lose clients — but as you drill down and build up valuable expertise in a specific area of law for which there’s market demand, you’ll add clients, many of which will pay better for your scarcer skills and knowledge. And thanks to the internet, your geographic market has widened enough to allow you to maintain your reach while narrowing your offerings. Solo specialties are not unprecedented: criminal defence and family law practices are longstanding examples (although “vocation” is also a good way to describe these challenging but socially crucial practices). Most solos outside these areas of practice, though, have been general business and consumer lawyers. Now they need to focus.

2. Sophisticated. This is partly a function of specialization, as described above, but it’s also a function of business infrastructure. Solos cannot afford to give anything away to their rivals in bigger firms — yet they’ve usually been quick to concede organizational sophistication: we don’t have the marketing budget, we don’t have the IT capability, we don’t have the administrative capacity to do what bigger firms do. This simply isn’t a viable concession to make anymore — solos need to be running businesses as powerful and efficient as any big firm in their neighbourhood. Mid-size and larger firms that have taken infrastructure seriously and invested in it (especially on the client-facing side) have changed marketplace expectations of what a law practice should be able to do. You’ll have to keep up.

Fortunately, now you can. The available suites of law practice management software have never been better, more varied, or more affordable than they are today. In addition, cloud-based law practice management providers have emerged and have become completely reliable in a remarkably short period of time, removing the need to host any of this software or data on your own office systems. Virtual assistants can carry out administrative tasks as or more cost-effectively than an on-site person, often at customizable hours. Good websites and blogs allow solos to build up market profiles many multiples greater than their physical footprint could manage alone. Advanced client intake/contact and workflow systems can be implemented once and left humming for years to come. Your business can now be as sophisticated as you need it to be without overwhelming you with time and financial costs.

3. Collaborative. The “lone wolf” image of the sole practitioner was hard-won and is something many solos continue to treasure. But as I’m sure you’ve heard, this is no time for lone wolves, not in this economy or in this society. Solos simply must be networked, connected and collaborative in order to survive. Partly this is a matter of taking advantage of both old and new networks, from specialty bar groups to LinkedIn, and of contributing to communities like the blawgosphere. But it’s really about learning to collaborate with other solos, and even with larger firms, on projects that more and more frequently will involve multiple types of lawyers to achieve the client’s objectives.

The biggest knock against small law practices is that clients are reluctant to entrust them with anything more than small jobs — that for work of any real size or scale, clients consistently seek out the bigger firms with their greater manpower and their brand assurance that size guarantees reliability. This may prove to be many large firms’ strongest and most resilient selling point: don’t worry, because we have the critical mass to get anything done. That may be a battle that solos can’t win — but it’s not territory that you want to give up altogether, because the financial and intellectual rewards of big projects can be immense. So find ways to collaborate with other practitioners — perhaps as part of the free-agent lawyer wave, perhaps by launching your own specialist solo network that works together on projects — finding ways to punch above your traditional weight class.

4. Innovative. In many ways, I think this is the most important feature of the successful 21st-century solo. Sole practitioners have long prided themselves on flexibility, nimbleness and efficiency as market advantages, but bigger firms are now picking up some of these features by necessity. Solos can continue to have an entrenched advantage in innovation, however, because the bigger you are, the harder it is to enter new markets and try new things. Here’s how Clayton Christensen puts it in The Innovator’s Dilemma:

[C]reating new markets is significantly less risky and more rewarding than entering established markets against entrenched competition. But as companies become larger and more successful, it becomes even more difficult to enter emerging markets early enough. Because growing companies need to add increasingly large chunks of new revenue each year just to maintain their desired level of growth, it becomes less and less possible that small markets can be viable as vehicles through which to find these chunks of revenue.

Newly emerging markets offer tremendous potential, but big companies simply can’t afford to expend the resources necessary to exploit them early enough. That’s not a problem for smaller companies, which is one of the reasons why so many of today’s disruptive technologies and new markets were harnessed by start-ups. (Christensen himself recommends that big companies set up separate small divisions to pursue such opportunities.) Small law firms are in the same position: they can afford to innovate, to take chances and to try new markets and approaches in ways that big firms can’t. I submit that this will prove to be solos’ most formidable marketplace advantage, and they should press it.

What that means is that you can’t continue to practise solo law the way you always have before. You need to break out of the habits, limitations and rules that you always assumed constituted the underlying framework of sole practice. Maybe they did, once; they don’t have to anymore. Seek out clients from sectors you always thought were beyond your reach: what would it take to bring them in and keep them? Run your business in ways few other solos or small-firm lawyers would try:

and many others beyond what I’ve just tossed off in a few lines. Create markets where they didn’t exist before, deliver services in ways that haven’t been done before, define and run your business in ways that haven’t occurred to other lawyers before. The ability to conceive of, and then act to exploit, new opportunities will be the hallmark of the successful 21st-century solo.

To that end, I’m going to punctuate this post with something pretty different in itself. In conjunction with Solo Practice University’s second anniversary on March 20, 2011, I’m giving away five scholarships to Solo Practice University (valued at US$695 each; CLE is not included), courtesy of Susan and her team. These scholarships will be given to five current or soon-to-be solos or small-firm lawyers who are now engaging, or are ready to engage, in 21st-century sole practice. Drop me a line at jordan@law21.ca and tell me about the practice you now operate or that you plan to develop — describe the ways in which it is or will be specialized, sophisticated, collaborative and/or innovative.

I’ll be accepting entries from March 15 to April 30, 2011. Throughout the course of May, I’ll select the top 10 entries and my colleagues at Edge International and Stem Legal will help me determine the five winners. I’ll then post the winners, and descriptions of their practices, in a post here at Law21 on Wednesday, June 1. Get ready to innovate!

Jordan Furlong speaks 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.

Are you selling the lawyer or the firm?

From England and Wales, the newest hotbed of innovation in the current legal marketplace, comes word that the first nationwide solicitor franchise is on its way. Legal Futures reports that Face2Face Solicitors “is initially aimed at small private client law firms and will provide franchisee solicitors with centralized back-office systems – including accounts, IT and regulatory compliance – and central marketing and business development, to enable them to focus on the legal work.” Face2Face would seem to fit the Alternative Business Structures model very well, and in fact, the company plans to register as an ABS when the starting gun sounds October 6.

Face2Face is compared to and contrasted with another British operation, Quality Solicitors, which has been around for longer. Quality Solicitors is a network of about 200 independent law firms across the UK, ranging in size from solos to firms with more than 40 partners. Face2Face characterizes QS’s business model as one that rebrands existing firms, whereas its own model is “targeting start-ups, breakaways and firms looking to be ‘reconstructed,’ especially if there is a need to consider succession/exit.” In practice, the two models probably won’t come across much differently to clients; in both cases, they’ll see a small law firm with a franchised brand and the promises that come with it.

The UK, of course, is also home to the still-mythical “Tesco Law,” the widely mooted example of what the ABS provisions of the Legal Services Act would enable: legal services sold by supermarkets. This too would be a franchise operation, albeit with the franchised firms operating inside the mega-stores rather than in downtown or suburban storefronts. Canada has something similar with the “President’s Choice” line of banking and insurance services offered through Loblaw’s or the Great Canadian Superstore supermarket chains. (I enjoy telling US audiences that the Tesco Law equivalent in Canada would be “Loblaw’s Law”).

President’s Choice aside, however, the idea of franchise law firms hasn’t taken off in North America. I still remember the launch, back in the mid-1990s, of First American Law (not to be confused with First American Title Insurance or the First American Law Center), which planned to build a fleet of small branded firms across the US and Canada. Perhaps because it was ahead of its time, FAL didn’t take. The idea hasn’t gone away, though: Richard Granat recently floated the idea that LegalZoom might get into the same kind of business, supporting small firms with a brand and a back-office processing center.

The common thread in all these companies and concepts is this: a series of small firms, from solos up to about five lawyers but conceivably larger, operating independently but under a single brand name and supported by centralized web-based back-office support and marketing functions, serving consumers and some small businesses in heavy-traffic areas of law like family, real estate, wills, and business law. Because the work is what lawyers like to call “commoditized,” the brand becomes extremely important. Among the promises that QS firms make to their clients, for instance, are “no hidden costs,” “direct lawyer contact,” “same day response” and “the first consultation free.”

That’s one vision of the future. At the opposite end of the spectrum lie the global giants, and they’re taking a much different approach. Most of these firms dread the “commodity work” label and strive to serve a high-end market of major corporate clients with complex, challenging, high-stakes work that engages lawyers intellectually and rewards them stunningly. And while smaller firms are turning to a faceless brand to give them an edge, the larger firms are counting on faces, very specific ones, as their salvation.

The Wall Street Journal‘s recent report on lateral hiring trends was one of a growing number of accounts of law firms raiding rival firms for superstar partners with large books of business. These laterals don’t come cheap: many new arrivals expect compensation up to ten times heftier than what some of their new colleagues are earning. The compensation gap is to be expected, of course: just as LeBron James is paid a lot of money because he’s expected to fill a lot of seats, laterals are expected to earn their keep and more. But it’s still interesting to hear DLA Piper chairman Frank Burch explain the rationale behind lateral hires: “We are focused on making big, strategic hires, who can allow us to achieve greater stature and visibility in the business community.” That’s not a productivity argument; that’s a marketing argument, a profile-augmentation rationale.

None of this is new, of course: smaller firms that sell what everyone else is selling need to find a market differentiator (hence the interest in brands), while large firms want to sell services of a type or quality that no one else is selling and make that the differentiator. The question, at this stage, is which of these approaches makes more sense in the marketplace of the near future? It seems to me that going forward, the branded commodity approach actually has more upside.

I was speaking at a retreat for an AmLaw 100 firm last summer, and one of the lawyers asked me about what the future held for both “commodity” work and “bet-the-company” work. My response was that virtually every law firm mid-size and higher insists that it wants to pursue the latter kind of work, that that’s what it wants to be known for in the market. The problem, I said, is that there’s actually relatively little work of that kind available — companies don’t bet themselves every day — and thousands of law firms are all chasing it. Compare that to the “commodity” work: there’s tons of it out there and hardly anyone wants to provide it (indeed, judging from the number of self-represented consumer clients, there’s a massive shortage of supply). Which of these two areas looks more promising from a business development perspective?

The high end of the legal market is over-served and the low end is under-served, and there’s two reasons for that. One is that many lawyers don’t find the low-end work “challenging” enough (to which I say, find me a high-paid M&A superstar who can last a week in family court without breaking down). The other, of course, is that the low-end doesn’t pay enough. But I’ve written before about how it doesn’t matter how much the client pays, it matters how much profit you make after the costs you incur are subtracted from the price you charge.

National branded legal franchises look like an excellent way to accomplish the goal of providing more with less to this market. Let us do the things you hate, the franchisors tell lawyers, like marketing and branding and administration and whatnot. You do the things you love, like practise law and serve clients. Our efficiencies reduce your costs, so you can price competitively yet still keep more of what you charge (with a slice to us, of course). As more and more legal tasks pass through Richard Susskind’s five declining stages of work, from bespoke to commodity, the “low-end” “commoditized” share of the market is going to grow. Firms that took a more enlightened approach to this sector should reap the rewards.

And the big firms, the global giants? They have plenty of marketing and branding firepower, without question, and they’re awfully good at what they do. But they’re also susceptible to the weakness inherent in the traditional law firm model: your assets walk out the door every night, and you need to pray they come back the next morning or else you don’t have a business. The Lawyer reported this month on a survey of nearly 2,000 partner moves in London from 2005-2010 that found almost half of those hires left their new firm within five years, and up to a third left after three. Do you think those acquisitions were good investments of those firms’ time, money and effort?

As legal work drifts towards commoditization, lawyers drift towards fungibility. All five partners in your branded storefront franchise walked out today? You can probably find five other lawyers with very similar skill sets to replace them — and in this economy, you can probably do so fairly quickly. But brand names and logos — they don’t leave. Now suppose that all five partners in your large firm’s biotechnology practice group walk out the door; you have a much bigger problem. A wise manager once said that if he discovers he has an irreplaceable employee, his mission become making that employee replaceable. Large firms that boast about the irreplaceability of their top earners perhaps don’t realize the double-edged nature of that particular sword.

The oldest axiom in the legal business is that clients buy the lawyer, not the firm. This is true and always will be true, insofar as the lawyer brings something unique to the table: extraordinary skills, outstanding personality, or perhaps most importantly, the ability to craft and perfect a trusted relationship. But absent those conditions — and those conditions, I expect, will become increasingly rare — and with bespoke legal work diminishing, clients’ buying criteria are going to expand to emphasize factors like price, accessibility and reliability. When you’re sliding towards those criteria, you’re walking into territory where national brands have developed a very strong home-field advantage.

Are you selling clients your lawyers or your firm? Think carefully about the ramifications of your answer, now and down the road, because clients are starting to ask themselves the same question.

Jordan Furlong speaks 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.

Follow Friday

I’ve been on Twitter for nearly two and a half years now, but I’ve yet to take advantage of one of its better features, Follow Friday. If you’re not familiar with it, #FF is an opportunity to recommend one (preferably) Twitter stream to your followers, along with a brief explanation why. The main reason I haven’t taken advantage of Follow Friday is that if you really want to know which Twitter feeds I recommend, follow all the ones I follow. I only track about 200 Twitter accounts, and I try to cull the list every so often to maintain a 1-to-10 follow ratio, so everyone on my Following list comes with a thumbs-up from me.

Nonetheless, I thought that it might be useful if I identified the Twitter feeds (and the blogs) that I really rely upon when it comes to understanding better the revolution underway right now in the legal marketplace. I’m extraordinarily grateful that these people and organizations deliver so much information and insight regularly, for free, and I wanted you to be able to share the value that they provide.

A Twitter account’s or blog’s absence from these lists does not, I want to emphasize, signal a lack of appreciation or endorsement: I follow many bloggers and Twitterers on subjects like legal technology, legal education, social media and so forth. These lists are what you could call my “legal innovation” recommendations: content streams that consistently appear and focus on the changing marketplace environment.

One more caveat: for conflict of interest reasons, I’m not including blogs or Twitter accounts from my friends and colleagues at Stem Legal or Edge International, although I do follow and recommend Law Firm Web Strategy and the Vancouver Law Librarian Blog (both by Steve Matthews), Amazing Firms, Amazing Practices (Gerry Riskin), At The Intersection (Pam Woldow), and Ed Wesemann‘s eponymous blog.

Okay, that’s it for the disclaimers. Here are 10 blogs and 20 Twitter accounts that explore and report on the rapidly changing legal marketplace; each would reward an investment of your time and attention.

Blogs

3 Geeks and a Law Blog: Toby Brown, Greg Lambert and Lisa Salazar write maybe the best legal innovation blog now in operation.

Adam Smith Esq.: Bruce MacEwen delivers a rare combination of sublime writing and strategic guidance for large firms.

Legal Futures: Neil Rose’s website has a blog, but the whole site is a must-read for the latest developments in the most important legal laboratory: London.

John Flood’s Random Academic Thoughts: Tremendous and incisive insights on UK legal practice and legal education.

Seth Godin: For my money, the best blog anywhere: marketing and client service, yes, but really about making this a value(s)-driven world

Slaw: More than just a legal blog, Canada’s foremost entry in the blawgosphere has become, I think, the first online legal magazine.

Strategic Legal Technology: Ron Friedmann writes about offshoring and commoditization, taking the pulse on the legal workflow revolution.

The Intelligent Challenge: One of the best new law blogs, this UK entry from Mark Smith is remarkably insightful about the legal market.

The Legal Brat Blawg: Financial Times GC Tim Bratton’s new entry, another must-read from the UK, has a journalistic edge rare in legal blogs.

The Wired GC: John Wallbillich brings another (former) GC perspective to his ongoing deconstruction of the outside counsel relationship.

Twitter accounts

In addition to the Twitter accounts attached to the foregoing blogs, here are some more that I highly recommend.

@AdrianLurssen: JD Supra co-founder, VP of Strategic Dev. Ex Yahoo! Writer. Editor. Poet. All-around word guy. (Formerly tweeting @jdtwitt)

@attnyatwork: One really good idea every day

@BetsyMunnell: Former BigLaw partner/rainmaker now relentless career & business development coach for young lawyers/law students; mother of 3; Francophile; expat New Yorker

@donnaseyle: Founder/Coach, Law Practice Strategy, provides resources & training on newly-emerging law practice solutions for solos & small firms:

@eicdocket: Association Publishing Executive, Mom, Wife, Avid Reader, News Junkie, Bunco Player. Roll Tide! Redskins fan.

@jasnwilsn: V.P., Jones McClure Publishing | author, writer of law practice manuals | former trial & appellate attorney | fan of all things tech & paper

@jayshep: Saving the world from lawyers (and saving lawyers from themselves)

@jkubicki: Legal process engineer & project management

@JuSummerhayes: A non-practising solicitor with a passion for excellence in professional practice and social media.

@KevinOKeefe: CEO & Publisher of LexBlog. We’re improving the lives of professionals by building the world’s premier legal network. 28 year lawyer. Father of 5.

@KrebsatACC: Pres., Assoc of Corp Counsel, photographer (http://fredkrebs.zenfolio.com) frustrated Browns, Indians & Cavs fan

@lancegodard: International legal business development and marketing consultant. I help law firms grow and prosper

@LawyerCatrin: Editor of The Lawyer; Welsh-speaking North Londoner; likes theatre, polyphony, music education, curry and the works of Nelson Riddle

@matthomann: Legal Thinker. Innovational Speaker. Creative Facilitator. Dad.

@PosseList: U.S., Canadian and international temporary/contract/freelance attorney market

@pwoldow: Master Coach, Attorney, Advisor to General Counsel & ABA Legal Rebel

@StephenMayson: Director and Professor of Strategy, Legal Services Institute, London; strategic and non-executive adviser; certified business coach; speaker; author; wine fan

@TheTimeBlawg: The past, present and future practice of law (brought to you by Brian Inkster)

@VMaryAbraham: Knowledge Manager, Blogger, Corporate Lawyer, Social Media Enthusiast, Personal Knowledge Management Coach, Twitter Fan.

@ValoremLamb: Trial lawyer for business using alternative fees; Change agent for legal profession,Husband, Father of 4, Blogger

As I say, this only scratches the surface of the available social media resources for lawyers and the legal marketplace. Your turn: what blogs and/or Twitter accounts would you recommend to other readers of this blog (yours not included, of course), and why?

The new price wars

Their World Series victory last fall wasn’t the only surprise the San Francisco Giants sprang on the baseball establishment. Throughout the 2010 season, the team engaged in “dynamic pricing,” changing the price of single-game tickets according to demand. The same seat for a Monday night yawnfest in May against the Washington Nationals, for example, would be priced well below a Friday night game down the stretch in September with the L.A. Dodgers. The new system, which reflects the ancient marketplace rule that demand drives price, produced a 6% revenue increase throughout the season and is expected to spread throughout not just MLB, but also the NBA and NHL in short order.

The Giants’ approach will sound familiar to anyone who grew up, as I did, in the era of “cheap night” at the movies, wherein ticket prices for Tuesday night showings were less than half those of other nights. The theaters, normally all but deserted on Tuesdays, were instead always full. Given that cinema owners make most of their money off concession sales, I imagine that “cheap Tuesdays” were immensely profitable. But as Malcolm Gladwell observed in The Tipping Point, theaters could actually go farther and change the price of individual movies according to their popularity, much as the Giants are doing with their game tickets: charge more for The King’s Speech and less (much less) for Yogi Bear.

There’s a reason why price tags are printed on cheap stickers, easily applied and frequently changed. Price is not carved in stone; it’s elastic, a function of supply and demand. This is true even in the law: it’s the rare lawyer who has never offered a discount on his or her hourly rate to win a client engagement. But rate discounts are about as radical as law firms have ever gotten with price. For most lawyers, fixing a price in advance of providing the service is anathema, and adjusting that fixed price according to a set of evolving criteria is farther beyond the pale again. But I think that’s about to change.

What got me thinking in this direction were reports this week that henceforth, DLA Piper (the newest holder of the “world’s biggest firm” title) was instituting minimum purchase levels for its clients. DLA’s US offices are said to be mandating an entry-level threshold of $200,000 a year for all new clients, while DLA International will set the amounts at €25,000 for new clients that don’t pose a potential conflict and €100,000 for those that do. The reasons, as explained in an excellent post by Financial Times GC Tim Bratton, are interesting: the firm wants lawyers to consider the firm’s strategic priorities more than their own; it wants to reduce the size of “conflict shadows” cast by smaller clients; and it wants to reduce the administrative cost of dealing with so many matters. Essentially, the firm wants many fewer, and much bigger, clients.

Some of my friends in the blawgosphere have called this a “cover charge,” but I don’t think that’s exactly the right analogy. A cover charge is an amount everyone pays at the entrance to ensure that no matter how little you spend upon entering, the proprietor will still turn a profit. DLA Piper, by contrast, is hiring a large, heavily muscled man to stand at the front door and admit only those customers who are guaranteed to spend enough to produce a profit. They’re pre-screening their clients for wealth, much as a legal aid clinic pre-screens its clients for poverty.

It might not win any points for populism, and there are serious implications for current and future partners. But as a strategic execution, as a profitability measure, and as a clear marketplace signal about which clients it desires, it’s brilliant: as Ron Friedmann notes, “it’s about making a conscious decision about your business, your costs, and your market position,” something few firms do. And in its own way, it’s an example of pricing innovation that other firms should follow.

I’ve written before about how the maxim “Don’t compete on price” has limited value in a highly competitive, price-sensitive market. Law didn’t use to be one of those markets; it is now, and some degree of price competition is becoming inevitable. But “competing on price” doesn’t have to mean getting involved in a downward-spiraling price war. As DLA Piper has demonstrated, you can compete on price upwards, setting floors rather than ceilings on how much you charge. For that matter, you can compete on price sideways, diagonally, and inside out through the fourth dimension if you like. You can make price a market differentiator simply by being creative and gutsy.

Examples are already abounding. Carolyn Elefant suggests that DLA Piper might effectively “offer $300,000 worth of service to clients who are willing to lock in and pre-pay the $200,000 minimum. Between the cash-flow benefit of receiving $200,000 up front and use of offshoring or second-tier contract lawyers in house, DLA Piper could still earn a decent profit, even while providing a ‘volume discount.” John Wallbillich at The Wired GC goes further: “What about a firm that does $1 million plus for a client not charging for telephone consultations with a defined number of client in-house counsel? Or provide access to part of a firm’s form files or knowledge management repository? How about a 3+ year associate on-site, gratis, for clients spending more than $5 million?”

Here are some more possibilities that law firms should mull over.

1. Charge like an airline. Some client matters are utterly routine, some are high priority, and some are absolutely urgent; but most lawyers tend to price solutions to each type of matter the same. Airlines thrive, even in a cutthroat marketplace, by charging you more for a ticket tomorrow than for one in three weeks’ time. What’s to stop a law firm from saying to client with an urgent problem: “To get this done tomorrow, we’ll need to drop everything else we’re doing and work on it for the next 24 hours; that’s a lost opportunity cost for us that will be reflected in a higher price.” Or conversely: “This is a low priority for you and can be done at a fairly leisurely pace by us; we’ll chop 30% off our regular price to reflect those facts.” Clients might not like the former treatment, but they’d understand it and probably accept it; they would love, and remember, the latter treatment.

2. Charge like a cellphone company. A dangerous comparison, to be sure, since many cellphone contracts epitomize the concept of gouging. But I mean this in the sense that many companies will discount the price of a cellphone itself, all the way up to 100%, if you subscribe to the connection service and payment plan. What would a law firm give a client for free in return for the guarantee of a fixed (and pre-paid) monthly fee over a two-year period? Maybe ten hours a month of a designated senior associate or junior partner’s time, no bills, no disbursements; maybe access to multi-jurisdictional regulatory compliance status updates; maybe an emergency “hot line” number that would put the client directly in touch with a responsible firm representative 24 hours a day. It would essentially be the freemium model applied to law.

3. Charge like a partner in a relationship. Seth Godin points out the cognitive dissonance by which many companies give their best rates to their worst customers: the difficult, the demanding, the frequent switchers. Similarly, their most loyal and enthusiastic customers are taken for granted and are charged accordingly. My Edge colleague Ed Wesemann has noted the same problem in law firms: discounts are offered to entice new business, but if the one-time client comes aboard and stays aboard, its rates soon go up and it’s relegated to the same “standard” treatment as the firm’s other “best” clients. Reward your best clients, give them discounts and freebies without being asked, simply to say thank you for being your relationship partner. As Seth puts it: make your best customers into your best marketers.

Lawyers resist change in many aspects of their work, but most of all in pricing: they try to pass all the risk of price miscalculation onto the client, a goal that the billable-hour system fulfills perfectly. Mature markets, however, allow (if not demand) more sophisticated pricing in which both the buyer and the seller accept some risk as a justifiable sacrifice to the greater goal of a stable, mutually beneficial relationship. DLA Piper is taking a risk with this new client minimum scheme, because it has both upside and downside: good for them, no matter how it works out.

Price is a conversation, not a command; it’s a journey rather than a destination. Lawyers with the wisdom to recognize that, and the courage to be flexible and creative in response, will emerge the winners from the new price wars that look poised to begin.

The year of the free-agent lawyer

Thomson’s acquisition of Pangea3 last November capped off what I think we can fairly call the year of law firm outsourcing. Among 2010’s LPO highlights, in chronological order, were:

What’s clear by now is that law firms are sending increasing amounts of work outside the firm, in two streams: (1) back-office tasks (administration, financial support, etc.) and middle-office tasks (research, document review, etc.) to LPOs in lower-cost locations overseas; and (2) routine lawyer work to law firms in lower-cost nearshore locations (expect more of that, and soon). We don’t hear much about clients’ direct LPO activities, but like icebergs, those are 90% hidden from view. And Thomson’s Pangea3 acquisition promises intriguing new developments to come on this front.

So we’ve just come off the year of law firm outsourcing: traditional firms contracting with distant corporate entities in lower-cost jurisdictions to carry out basic or routine work. I think 2011 will see the further development of a related but more important trend: the shift of lawyer work away from full-time associates and towards independent, unaffiliated, networked and mobile practitioners. The corporate outsourcing stream is branching out into an individual outsourcing stream. 2011 should be the year of the free-agent lawyer.

Almost two years ago, John Flood and Peter Rouse pointed out that law firms’ historic tendency towards full employment — maintaining platoons of full-time lawyers on the immediate premises — might have run its course, in light of both the recession and new service models at “dispersed” law firms such as Axiom, Rimon and Lawyers Direct. “Although legal work has become more commoditised and an increasing proportion of it shipped offshore,” they wrote, “it is perhaps lawyers themselves, both associates and partners, who are the commodities, traded and marketed by recruiters and head-hunters.” The new law firm model will be based on “contract lawyers” — attorneys retained for a specific project or a limited time, then released back into the market.

Law firms themselves soon caught on to the fact that many of the associates they had cut during the financial crisis could be brought back into the fold at lower costs, with fewer benefits, at the firm’s sole discretion. Last summer, an Altman Weil survey reported that “a majority of responding firms expect that contract lawyers will become a permanent part of their firm’s structure.” Altman’s Tom Clay added: “As firms become more comfortable with contract lawyers, AFAs, fewer partners, and whatnot, they’ll see it as a way to deliver services more efficiently to their clients.”

This past December, contract lawyer hub The Posse List noted that temporary lawyers were becoming a permanent solution. “[D]uring the recession, in order to keep the troops busy, law firms gave their associates work that would have normally gone to contract attorneys,” TPL wrote. “But now, even as the economy continues to improve, the ranks of ‘other’ attorneys continue to swell due to their lower cost and often more targeted experience. We have seen that as many contract attorneys with specialized experience move out of the document review rooms and into more substantive work.”

CEOs in all industries, not just law, have concuded that their labour costs have been too “fixed” and insufficiently “variable” in the recent past — the shift towards contract employees addresses that perceived imbalance. This chart from a recent issue of The Economist starkly illustrates that although current unemployment rates remain very high, there’s one notable exception: temporary or contract workers:

It’s not just in North America — the Posse List reports a steep rise in European and foreign-language document review work for contract lawyers. It’s not just “temporary” or “contract” lawyers, either: the last few years have seen a steady growth in the percentage of part-time lawyers (including partners) in law firms. And even within the ranks of law firm associates, a two-tier reality is emerging, notes Jerome Kowalski: a small elite segment of associates paid top dollar and expected to slide smoothly into partnership, and a “vast underbelly” of staff lawyers who are paid much less and worked just as hard, but are not held to strict billing or business development expectations.

Law firms, for once, appear to be near the front of a business trend: the lawyer employment model is shifting away from full-time work in law firms towards temporary, contract, part-time, dispersed, and/or remote free-agent lawyers. And this should be no surprise, because legal work itself is making the same transition: from a model in which every task was performed (and billed) by full-time lawyers inside the law firm, to a model in which legal work is carried out by the most appropriate, efficient and cost-effective performer, regardless of status or location. Associate leverage ratios have declined from their historic mid-’00s highs and figure to stay lower for the foreseeable future; formerly bottom-heavy pyramid-shaped law firms have become and should remain noticeably slimmer.

It’s a rational development, and in the end, it will produce a legal labour model more aligned to marketplace reality than to lawyer traditions. But from now on, many lawyer jobs will be much less secure, and significantly lower-paying, than the last few decades have led us to expect. And it will give rise to a number of implications and repercussions:

  • Law schools have not seen this trend coming and they have not adjusted their business model, which still pretends that huge tuition fees can be paid off quickly with a high-paying law job. At least three years’ worth of students have graduated into an entirely different market than the one on which their schools’ economic assumptions were based, and every year that schools fail to adjust adds another year of graduates with misaligned expectations. The long-term impact: a winnowing of the number of law schools and a general (although not universal) slump in revenue among the schools that survive.
  • Professional responsibility rules and practices will prove equally unready for the new model. As a friend who operates professional development in a large firm asks: to which lawyers should PD be applied? The future stars, certainly. But what about the staff, temporary and contract lawyers who produce work for the firm’s clients but are not expected to stay long enough to be considered a good educational investment? If firms don’t provide associate PD, where will it come from?
  • And what about conflict of interest rules? The same friend points out that contract lawyers who work for multiple employers on numerous matters will accumulate many more conflicts at a much faster rate. If the current rules on conflicts of interest are maintained and enforced, these lawyers will rapidly find themselves ethically obliged to turn down work, eventually becoming effectively unemployable. If we consider that to be a perverse and impractical outcome — and I think we should — are we looking at a two-tier ethics system? Or the collapse of an already unwieldy conflicts regime in the face of market pressure?

Despite all of that, however, I do think that this trend will eventually prove to be advantageous for this new generation of lawyers. I prefer to think of them not as “contract” lawyers or “temps” — terms that, in both reputation and reality, often aren’t so great — but as “free-agent” lawyers: agile, versatile, flexible, low-cost and high-quality sources of legal expertise. I think this new model will end up a net positive for the current and coming generation of lawyers. The advantages of free-agent lawyering should include:

  • a wider range of work,
  • more flexible work schedules,
  • a greater ability to respond to changing market needs,
  • more time for family and personal priorities,
  • better and more efficient work habits,
  • less attention paid to timesheets,
  • more opportunities for niche careers,
  • greater freedom to chart your own developmental path, rather than one shaped by the firm’s immediate needs, and
  • the ability to carve out your own independent professional brand.

Interestingly enough, free-agent lawyers could ultimately make law firms less important in the legal services market. In sufficient numbers, they will effectively constitute a new set of competitors: armies of independent lawyers who operate without the overhead costs and institutional inertia of law firms.

Free-agent lawyers might work for Axiom-style dispersed firms for as long as it suits them. They might ply their trade as independents with the assistance of Posse List-like organizations. They might come together to form emerging legal business networks of their own and use them to build brands and careers. They won’t be “solos” in the traditional sense — they ultimately work for other businesses, not their own — but they will constitute a valuable option for clients who want legal work done quickly, cheaply and well. LPOs will have to keep an eye on free-agent lawyers, too: they could be each other’s primary competition. Equally, though, the two entities could form alliances and pose an even stronger challenge to law firms.

Make no mistake, free-agent lawyers have a steep hill ahead of them: it’s a legal career on the edge, providing little leverage or security and demanding an entrepreneurial spirit. They could use some organizational help. But it does seem like a career path custom-designed for millennial lawyers, who were raised to multi-task their way through numerous serial careers with maximum flexibility and personal fulfillment opportunities. They represent, if not the future of the legal profession, one of a growing number of available futures for a legal marketplace increasingly in flux.

Jordan Furlong speaks 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.

Here and elsewhere

It’s time for my semi-regular roundup of articles and items that I’ve written for other websites and publications recently. I hope you enjoy the following entries as much as I enjoyed writing them.

1. Contributing to Stem Legal’s Law Firm Web Strategy blog, as a senior consultant to Stem, is a welcome opportunity for me to sound off on law firm communication, publishing and social media topics. I’ve been especially busy at LFWS over the last couple of months:

2. I penned two more columns for The Lawyers Weekly.

3. I was honoured to be among the first contributors to a great new site called Attorney At Work (“One really good idea every day”), where I also serve as an advisor. If you haven’t yet subscribed to the Daily Dispatch of short but insightful recommendations, you really should.

  • My first entry talked about lessons for lawyers from Sean Connery and The Untouchables: “What are you prepared to do?”
  • My  second contribution borrowed its title shamelessly from Lao Tzu for thoughts on teamwork: “The art of we.”

4. I wrote a guest column for Canada’s Precedent magazine, which focuses on the lives and careers of young lawyers in big law firms, that talked about merit-based compensation for associates with the admittedly provocative title: “Seniority pay must die.”

5. The good people at JD Supra invited me to join a stellar group of contributors and write about what surprised us in 2010 and what 2011 likely will bring. Here’s what I submitted.

6. Finally, no list of my written contributions would be complete without my column at Slaw. My most recent edition talked about the fundamental irreplaceability of trust in a successful client relationship: “Your client is not your enemy.”

Finally, I was honoured to receive the Sherry Fowler Best Writing on a Blawg Award for my work here at Law21 from Dennis Kennedy in the 2010 edition of his coveted Blawggie Awards. My sincere thanks to Dennis, to all the hosts who invited me to contribute to their excellent publications, and to all of you for continuing to tune in here and elsewhere.

The future of lawyer associations

Thomas Wolfe says you can’t go home again; nevertheless, I’m returning to my alma mater Queen’s Law School tomorrow to give a presentation on the future of the legal marketplace. While preparing slides for my section on networking, I noticed that examples of old-line bar associations (the volunteer kind, not mandatory or regulatory bodies like law societies or state bars) were becoming outnumbered by examples of new networks, everything from Facebook, Twitter and Quora to LinkedIn, Legal OnRamp and Solo Practice University. And that got me thinking about the future of lawyer associations.

This is a topic, I must tell you, into which I tread with caution. After all, I spent ten years drawing a paycheque from a bar association, and I continue to speak to and advise legal associations among my current consulting engagements. But I think it’s time to take a hard look at what lawyer associations, some of which trace their origins back to the 19th century, are and aren’t capable of selling to a 21st-century marketplace.

Lawyer associations of all kinds coalesced around a basic truth: there’s strength in numbers. Joining a group of professionals with similar practices, interests and affinities provides a practitioner with the comforts of collegiality, the advantages of an amplified voice, and the possibility of personal gain (referrals, learnings, and so forth).

But maybe more importantly, lawyer associations provide the benefit that every kind of club bestows: self-affirmation. Almost every member of a lawyer organization is proud to be a lawyer and enjoys the elite and rarefied atmosphere of other lawyers who feel the same. Lawyer associations, in this sense, are aspirational: membership is often an endorsement less of the specific association’s virtues or policies or activities, than of the idea that lawyers are special and have special roles in (and responsibilities to) society. Lawyers like that notion, and they like the company of others who share it. That fact has to underlie a lawyer association’s purpose and functions.

Unfortunately, I think a lot of lawyer associations have lost sight of that. Most lawyer groups these days are preoccupied (reasonably enough) with value: are we providing sufficient return on lawyers’ investment of membership fees and volunteer time? It’s the right idea, but I think many associations take it in the wrong direction, by focusing too much on tangible rather than intangible benefits.

Lawyer associations spend a lot of money providing business-improvement resources (checklists, practice pointers, forms and templates), publishing practice management materials (newsletters, magazines, handbooks, etc.), carrying out CLEs (both the in-person and online variety) and obtaining member discounts. These activities are sensible, legitimate and valuable — I’m a former association magazine editor, after all. But the thing is, many other people are offering them too. There’s not much unique about a CLE or a handbook or a discount provided by a lawyer association — it’s rarely a positive differentiator from the rest of the market. Lawyer associations that over-emphasize these services have to answer the question: what do you provide that I can’t also get from the market at large, on an à la carte basis, for less than my annual membership fee?

Many lawyer associations recognize this risk and undertake less tangible activities too, chief among them advocacy on lawyers’ behalf (or, put less delicately, lobbying governments as a special interest). Certainly, no one else will advance lawyers’ claims, given the perception that such interests are not always, shall we say, fully aligned with the greatest public good. But lawyers have as legitimate a claim to advocacy as any other constituency, and lawyer associations can and should uniquely fulfill this role. The problem, though, is that lobbying is not exactly what you call aspirational: necessary as it may be, it’s not a parlour game and it can be an unpleasant experience for all concerned. A lot of lawyers hope for something more from their association than simply aggressive self-interest.

Maybe the answer is public-interest advocacy? Many lawyers are motivated by the belief that laws should be fair and justice should be accessible, so a lawyer organization that publicly urges progress on these fronts will attract aspirational lawyers without repelling the average citizen. That makes a lot of sense and again, is a worthy undertaking for a lawyer association. But there are problems here as well. Public-interest advocacy is a difficult and thankless task that produces relatively few wins against a series of draws or losses; “social justice” issues adopted by an association can be internally divisive and even incendiary; and most pointedly, lawyers do tend to ask, after a while, what benefit they personally get from their association fighting the good fight.

Again — all of these activities have merit, to one degree or another, and lawyer associations legitimately can pursue any of them. The challenge is that, especially in a recessionary period and in the face of unprecedented private-sector competition, they can’t pursue all of them. Associations have to choose strategically — and more importantly, they have to decide what their foundation is. What’s that one thing, that single unique and effective purpose, that associations primarily serve and upon which they are built? It’s not annual meetings, which have dwindled in attendance and importance as physical distances have become less of an obstacle to networking. It’s not improving the image of lawyers, investing thousands of dollars in fruitless efforts to make lawyers more appreciated and valued by a public that is quite happy to stereotype and scapegoat us. So what’s left?

My own suggestion is this: lawyer associations should transform themselves into lawyers’ marketplace evangelists. They should adopt as their mission a sustained campaign to trumpet the unique advantages of choosing lawyers over the many other options spreading throughout the legal services market. Our de facto monopoly on legal services is already disappearing, and our regulatory advantages likely will follow shortly. Lawyers need to differentiate themselves from the people, processes and programs that are coming into the marketplace and drawing clients away; but no lawyer or firm is going to launch an expensive and complex campaign that will benefit competitors as well as colleagues. Lawyer associations can. And they can do so by emphasizing lawyers’ training, professionalism, ethical standards and other outstanding characteristics with which lawyers are proud to be associated.

That’s what associations can do externally. Internally, I think they need to focus on collegiality and collaboration. As society becomes more virtual, face time becomes far more valuable. But lawyer gatherings of all kinds still over-emphasize the role of educational sessions and business meetings — events that lawyers can attend from their desks or on their smartphones — while relegating socializing and networking opportunities to short coffee breaks or abridged cocktail parties at the end of the day. Associations should reverse this: host gatherings to network and socialize first, and to learn or conduct business formally as a sidebar. Look for ways to encourage face time and personal interaction among lawyers — hold un-conferences, sponsor speed-roundtables, form micro-panel discussions for small, specialized groups, and so forth.

Law firms are difficult organizations in which to effect change, and law schools even more so. But the challenge of transforming lawyer associations might be the greatest of all, because institutional memory and habits are powerful and deeply ingrained and decision-making ability is often widely diffused. But the need is real, the challenges are building, and the clock is ticking. One way or another, voluntarily or otherwise, change is coming to the lawyer association sector, too.

Jordan Furlong speaks 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.

Lawyers and the red balloon

Like many parents of small children, I’ve gotten to know Thomas The Tank Engine, and the peculiar universe he inhabits, far too well. As an example, I’ve now read the story James and the Red Balloon so often that I’ve begun to draw lessons for the legal profession from it.

To summarize: among the trains that work the Sodor Island Railway is James, a generally decent but often fussy and sometimes belligerent engine. On this occasion, James is unhappy to learn that a new mode of transportation has come to the island: a big red hot-air balloon. While the other engines admire the new arrival, James is peeved. “Taking vacationers around the island is our job,” he complains. “What if the balloon takes our passengers away? What will happen to us then?” By the end of the (admittedly brief) story, James has brought his grievances to rotund railway boss Sir Topham Hatt:

“But now the passengers will ride in the hot-air balloon.”

Sir Topham Hatt laughed.

“You’re right, James,” he said. “But they will need a ride home — in a train!”

James was delighted.

Sir Topham Hatt was right. The engines were busier than ever taking vacationers to and from the airfield.

On Sodor, as the Thomas stories bear out, change is rarely welcomed — but once everyone understands the situation better, change is accommodated and in the end, usually turns out to provide a net benefit. This is a message aimed at children but that resonates in the grown-up world, where we all tend to resist change despite the fact that eventually, it usually makes things better for everyone.

Few grown-ups resist change as staunchly and successfully as lawyers, of course — we’ve always shot down red balloons as soon as they appear in our sky. That doesn’t just apply to new technology, where we were among the last professionals to adopt email and where many of us still insist that Facebook is just a fad about which 500 million people are sadly misguided. And it doesn’t just apply to new ways of doing business, where we still reflexively feel that selling our work in tenths of an hour is natural and sensible or that 1,000 lawyers in 20 law offices worldwide can call themselves “partners” with a straight face. It applies above all to our approach to the legal marketplace over which we maintain, in most jurisdictions, strict regulatory control.

Lawyers, as a matter of course, restrict the supply of legal services and enforce Unauthorized Practice of Law provisions. We rail against title insurers and do-it-yourself will kits and independent paralegals and downloadable contracts and legal process outsourcers and a host of other low-cost competitors. We say (and we often believe) that we do this to protect the interests of clients and the public — but outside the soundproof walls of the profession, we come across more as protectionists than as guardians with a selfless concern for the greater good. We come across as hostile to change simply because it’s different and threatening.

My point is not that all these new providers and approaches are inherently trustworthy and high-quality. My point is that we won’t so much as let them make their case — even if, over time, they could introduce changes and innovations that make the pie bigger and better for everyone. Take, for example, LegalZoom. Richard Granat at the E-lawyering Blog gives us one of the most arresting titles in recent law blog history: Will LegalZoom become the largest law firm in the U.S.?

LegalZoom has been beta-testing a concept which links its marketing capabilities to a network of law firms that offer legal services under the LegalZoom brand. With some state bar associations accusing LegalZoom of  the unauthorized practice of law, it might make sense for the company to seek deeper alliances with networks of attorneys who are able to offer a full and ethically compliant legal service. Solos and small law firms, leveraging off the visibility and prominence of the LegalZoom brand, could reduce their marketing costs and enable these firms to better capture consumers who are part of the “latent legal market”  on the Internet.

Richard goes on to list the challenges that this concept likely would encounter, and suggests a “safe harbour” provision that would allow experiments like this to operate on a pilot basis in a specific jurisdiction to test their application. Another approach might be to simply launch the service, await the inevitable regulatory challenge, and let the courts decide whether the legal profession’s anti-competitive rules really serve the public interest. But for me, the lesson here is that LegalZoom, a company regarded with contempt by many lawyers, could end up using its considerable brand power to work with law firms, reduce their marketing expenditure and increase their business (not to mention, as Scott Greenfield points out, doing something to improve access to justice). That looks to me an awful lot like a red balloon bringing more passengers to the railway.

Smart companies in mature industries encourage red balloons (new competition and innovative technology) because they see them as a way to enlarge the market, reach more customers and increase everyone’s bottom line. The people at Amazon could foresee the day when Kindle users began swapping their books much like music listeners once traded tracks on Napster. Rather than fighting the trend, they’re now leading it by allowing users to “lend” an e-book to a friend for two weeks. Isn’t Amazon cutting its own throat by encouraging people to read books without buying them? On the contrary, says the founder of a Facebook lending book club: it will increase sales because people will want to own the book they borrowed (e-books can only be loaned once, ever) or weren’t able to finish in the two weeks. Libraries didn’t exactly kill the publishing industry when they first opened up, either.

It’s a pretty sad comment on the legal profession to say that publishing has become a more mature and forward-thinking industry than law, but that’s where we appear to be. If we want to change that state of affairs — if we want to grow up as a market and as a profession — then we need to stop thinking like a selfish train in a children’s story, viewing new arrivals as a threat to our narrow, entrenched interests. We need to find ways to welcome and accommodate the red balloons that are now floating, in growing numbers, into the sky above our heads. Chances are, at least some of them will end up bringing more passengers our way than we think.

Jordan Furlong speaks 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.

So what happens next?

As the year winds down and alternative fee arrangements become more widespread among lawyers, I’m finding myself doing something curious: I’m being nice to the billable hour. Not defending it, exactly — others are happy to do that — but being more nuanced in my criticism and even citing examples of billing relationships where it makes sense to price by time. This from someone who, in his days as a magazine editor, once published a cover story titled “Time’s up: counting down the billable hour.” There’s a lot more evidence of hourly billing’s demise today than there was five years ago when I ran that story, yet apparently I’m now the soul of caution.

And I’m not the only one: at a time when those of us who champion innovation in law practice management should be leaping and shouting that the long-expected day of liberation is at hand, I’m getting a palpable sense out there that, you know, maybe this isn’t the actual revolution quite yet. Part of this might be the fear we experience (felt as hope by many inside the profession) that the tsunami of change we’ve been announcing for the last 12 to 18 months is, in fact, simply a rogue wave or two. Part of it might be that quiet terror experienced by anyone at the threshold of a long-awaited goal that something is going to jump out of nowhere and take away all the gains you’ve made. And who knows, part of it might be that realization, just as you’re about to vanquish a longstanding but suddenly diminished enemy, that your foe really wasn’t as terrible as you thought it was.

But there’s a further possibility, one that occurred to me after reading an article by Jonah Lehrer in a recent New Yorker titled “The truth wears off” (subscription required; summary here). The article documents a baffling and disturbing recent trend in science: scientific results decline over time, both in magnitude and frequency, in everything from drug trials to particle physics. Many explanations were advanced in the article, but one of the most persuasive is the pernicious effect of publishing. Everyone wants to see their hypothesis proved and thereby receive a career-making publication in a respected scientific journal, so researchers (even honest ones) allow their judgment to be clouded and “see” results that aren’t there or aren’t as strong as they’d like to believe. It’s not that “the truth wears off” — it’s that the “truth” was never as true as it was first believed to be.

I wonder whether we’re not a little guilty of this ourselves in the legal innovation community. 2010 was the year that the mainstream legal media and even the wider business press caught up to what the blawgosphere had been saying (especially since the financial crisis): the watershed event that we’d long anticipated has finally happened, and nothing will ever be the same in this marketplace again. But the truth behind the shift was always more complicated than just “the recession” — the emergence of LPOs, the advance of technology, the rise of sophisticated pricing options, the continuing decline of lawyers’ aura of expertise, and the effect of generational evolution among both lawyers and clients figured into the mix too. And the last time I checked, the AmLaw 200 had not been reduced to piles of rubble in downtown cores — and anyway, the AmLaw 200 and its equivalents elsewhere in the common-law world represent a tiny fraction of a legal marketplace that is still far more consumer- than corporate-focused.

The buying and selling of legal services has always been a vastly complicated marketplace that only appeared simple from inside the protective shell of the legal profession. If there’s one thing we can say with certainty about what happened in 201o, it’s that that shell has cracked. Lawyers in law firms are no longer the sole option for legal service purchasers and they never will be again. But that is almost the only thing we can say with certainty. The legal marketplace is in immense flux, and it would be foolish to make table-pounding predictions about what will happen next: there are too many variables, too many players, too many elements in motion. Law firm lawyers could storm a comeback and assert themselves as the dominant providers in a new, fragmented, online-delivery market; they could also disappear beneath the waves.

What I want to remind everyone in this market — what I want to remind myself — is that we’re at the start of this voyage, not the end of it, and nobody owns a reliable map. I know where I think we’re headed: multiple service providers, including law firms, virtual lawyer networks, LPOs, and automated systems; a few gigantic global firms and legions of smaller, streamlined, regional niche firms; the long-term resurgence of the sole practitioner; the end of lawyer regulation of the legal services market; variable quality of and lower prices for those services; and lower incomes for all but a handful of lawyers. I have good reason to think all these things, which I’ll happily expound upon for you over a drink or at a lectern. But things changed fast this year, and I’m betting they’ll change even faster through this second decade of the 21st century.

This time last year, I wrote: “Years from now, we’ll look back on 2009 as the year the legal market began to change; but we’ll look back on 2010 as the year lawyers began to respond.” By and large, I’d say lawyers did a pretty decent job responding, from AFAs to outsourcing to rethinking legal talent; but the marketplace’s rate of change accelerated, leaving us relatively farther behind. I think we’ll look back on 2011 as the year the profession’s walls really came tumbling down and new competitors began to assert themselves, aggressively, in multiple sectors at once. But I emphasize again: these are still very early days, and there are developments coming that no one can foresee. Amazon buying Lexis-Nexis? Google buying LegalZoom? Goldman Sachs buying equity in a global law firm? You can’t dismiss any black swan scenario anymore.

No matter how you feel about change in the profession — whether you hope for it or fear it — watch what’s going on, listen to other points of view, accept information that might not fit your hypothesis, and be ready to adapt your beliefs and your approach. And above all, be ready to move on very short notice. If you think the last few years have been crazy, I really think you ain’t see nothing yet.