Now here comes 2012, and from where I’m standing, it looks like a year in which the limits of perseverance will be reached and breached. There are just too many places within the traditional legal community where resistance to change will weaken and ultimately collapse. I want to point out three in particular that strike me as especially noteworthy harbingers of some new realities.

Disappearing law firms: Mergers and acquisitions of law firms picked up pace in 2011, but here in December came word of some interesting variations on the theme. Bryan Cave “merged” with Denver-based Holme Roberts & Owen, while Arnold & Porter “merged” with San Francisco’s Howard Rice. I put “merged” in quotes because it’s a polite fiction to pretend that these were anything other than flat-out acquisitions of law firms that were experiencing serious pain. Holme Roberts suffered a string of partner defections and staff layoffs earlier this year, while Howard Rice had lost nearly half its complement of lawyers in the last nine years, including two senior partners in 2009.

You can expect to see a lot more of these kinds of deals in 2012, because a lot of firms are having a very tough time adjusting to the new rules of the market. Some firms, as I noted in a post last month, don’t even make it to the acquisition stage: they simply disappear. This AmLaw Daily article makes it even clearer that dissolutions of law firms took place throughout 2011, starting with Howrey LLP and continuing with smaller and midsize firms throughout the year. You can call it “consolidation” if you like, but it also bears a strong resemblance to a profession-wide culling of the herd. Many law firms are weaker than they appear from the outside, or even from the inside, depending on how transparent their internal financial disclosures turn out to be. Some bigger dominoes could start falling early in 2012.

The rise of Asia: It remains something of a puzzle to me that the merger of China’s King & Wood and Australia’s Mallesons hasn’t set alarm bells ringing across the global legal marketplace. Now the largest law firm based in the Asia-Pacific region, with more than 1,800 lawyers, King & Wood Mallesons is something we’ve never seen before. Put it this way: Mallesons was one of Australia’s biggest and most esteemed law firms, large enough to entertain lengthy merger talks with Clifford Chance and innovative enough to be the only two-time winner of the College of Law Practice Management’s InnovAction Awards. Yet which firm wound up with top billing? That should tell you something about how much influence Chinese law firms are set to wield.

Will King & Wood Mallesons be able to crack the rich Anglo-American legal market? I’m not sure that’s on their radar right now. There’s more than enough work in Asia and Oceania to keep them busy, and frankly, it would be understandable if they think that their corner of the world has more medium-term upside than the western corner. But other Chinese firms are quite happy to go west: in fact, the two biggest law firms in China, Dacheng and Yingke, are preparing to open bases in London. Then there’s small Chinese firm Broad & Bright, in merger discussions of its own with none other than Clifford Chance. Years from now, we’ll look back on 2011 as the year China began breaking into the global legal market.

Alternative Business Structures: And heeeere we go. Starting the first week of January, the UK’s Solicitors Regulation Authority will officially throw open the doors to applicants of all stripes that want to become Alternative Business Structures under the long-anticipated provisions of the Legal Services Act. Regular readers will know that the SRA expects at least a dozen applicants straight away, and that the initial group will include law firms, claims management companies, major retailers, accounting firms, loss adjusters,  private equity houses, legal expense insurers, banks, will-writing companies, and even, remarkably enough, in-house law departments. I don’t know about you, but that looks like a revolution to me.

It’s a revolution that won’t stop at the English Channel or the North Sea, either. There are too many UK companies and law firms with offices worldwide to believe that the contagion can be contained. We’ve already seen the influence of the Legal Services Act in the ABA’s planned endorsement of limited, lawyer-controlled multi-disciplinary partnerships (although the degree of innovation here is comparatively tiny) and the lawsuit launched by Jacoby & Meyers to the restrictions against non-lawyer ownership of firms. Whether these initiatives succeed is almost beside the point: even the specter of massive change in the UK is enough to drive limited reform efforts. What kind of response will the real thing generate?

Those are three reasons to think that 2012 will be the year that the pressure relentlessly building on the fault lines of the traditional legal marketplace will finally produce the quakes we’ve been expecting for a while. And here’s one more: macro-economic and geopolitical events will play a role in the legal market as well. Europe’s financial situation is unsustainable, and the odds of something truly ugly taking place there and spreading worldwide seem to increase every month. The 2008 Lehman Brothers collapse and the resulting western financial crisis was the first shock to hit the legal system and generated a tidal wave of change. The next one could be bigger.

If you like living dangerously, then by all means, plan for 2012 to be another year of raising rates, de-equitizing partners, downsizing staff and taking whatever other measures you feel will continue to prop up the artificial and increasingly archaic metric of profits per partner. Keep on doing what you’ve been doing lately, just more of it. You might yet manage quite well, if your financial position entering the year was rock solid,  your firm culture intensely positive and your relationships with clients extremely sound. But if you feel like your foundation is a little shaky, your strategic direction has meandered, or your morale is brittle, then I think you’d be well advised to pay close attention to what comes next. We were warned.

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.

Here’s a quick review of some recent news concerning the US legal education industry and the legal profession it is purportedly preparing its graduates to enter.

• As reported by the Wall Street Journal and Slate, applications to US law schools have fallen by 11.5% in the past year and now stand at their lowest level since 2001. This is despite the fact that the number of ABA-accredited law schools has jumped 9% in that same period.
• As The New Republic discovered, employment rates nine months after graduation (reported by schools to be around 90%) include part-time, temporary and non-law jobs. Actual full-time legal employment figures likely don’t even break 50%.
• The New York Times found that 80% of US law schools insert “merit stipulations” into scholarship offers that mean students can lose their grants if their GPA falls below a given level.
• The National Law Journal reported earlier this year that three small law schools have announced tuition freezes, while the New York Law Journal found two other small schools have chosen to shrink their class sizes.
• The NLJ also reports that some law schools’ graduates, including SMU Dedman and Duke, are having such trouble finding work that the schools are paying for placement assistance programs.
• The ABA’s plan to seriously overhaul the law school accreditation process (again from the NLJ) appears so radical to schools that the American Association of Law Schools is pleading with the ABA not to go ahead.
• Finally, Steven Harper at the AmLaw Daily has a treasure trove of grim stats: 20% of US law schools’ 2009 graduates are still looking for work; net US law job growth to 2018 will be only 100,000 while law schools graduated 44,000 new lawyers last year alone; half of all US law grads have more than $100,000 in law school debt, and on and on.

I don’t know about you, but I look at these and similar accounts and I see a bubble just waiting to pop, or a system on the verge of a crash. This isn’t about the recession or the financial crisis anymore; this is about a serious misalignment between the industry that trains new lawyers and the marketplace that employs them. (Canada, by the way, is headed merrily in the other direction, with three new law schools set to open shortly; whether this is a sprint towards a cliff is a subject for another day.)

What we’re seeing here is the law of supply and demand applied to the law. The future legal marketplace is going to require fewer, differently skilled lawyers than it has during the past several decades, so this market recalibration should really come as no surprise. The market is telling law schools: we don’t need all these new lawyers, and we definitely don’t need the skill sets you’re giving them. Law schools aren’t listening, because they can’t: the production of traditionally credentialed graduates has become the reason for their existence and the core of their business model. Companies whose products are no longer in demand either find new products or go out of business. I see extremely few law schools capable of changing their product lines.

That’s one side of the coin. Here’s the other: shrinking demand for lawyers is not the same thing as shrinking demand for legal services. If anything, the overall legal services market seems poised for strong growth over the next decade or so. This isn’t only because an increasingly global, complicated and cross-connected world will have an equally increasing need for legal help to navigate it successfully. It’s also for two other reasons:

• Many legal tasks that no longer justify the expertise of a lawyer to do them must still be accomplished, but at better-aligned prices.
• The latent legal market, left untapped by generations of lawyers and law firms, is ready to explode, as the DIY law trend illustrates.

This is real demand, and it can be met by low-cost lawyers, foreign lawyers, quasi-lawyers, para-professionals, corporate providers, and automated systems. At the moment, there is a relatively limited supply of these entities. But just as the changing market is punishing old suppliers like law schools, it will reward new suppliers such as virtual law firms, legal process outsourcing companies, freelance and contract lawyer organizations, e-discovery specialists, automated document assembly programs, consumer-friendly legal kiosks and outlets, and many other options still at the embryonic stage. These are the directions in which the investment funds triggered by the Legal Services Act will flow, not (for the most part) into law firms and most certainly not into law schools.

Historically, demand for legal services has meant demand for lawyers, and the legal education industry evolved to reflect that. In future, demand for legal services will be met by a greater diversity of providers with different training and new skills, crossing previously sacrosanct lines of status, geography and even technology. That’s what’s really going on here: an old supply chain is breaking down, and a series of new ones are rising to replace it. Place your bets accordingly.

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.

We’re now less than six months away from the implementation of the Alternative Business Structures (ABS) provisions of England & Wales’ Legal Services Act. This event has been forecast as law’s “Big Bang,” the equivalent of financial services deregulation in the UK in the 1980s, although I suspect this will be a long rumble of change rather than a sudden explosion. But as we get closer to October 6, signs are emerging that should be making British firms very uncomfortable and firms elsewhere in the world more than a little uneasy. It’s quite possible that the biggest change in legal marketplace history will pass law firms by.

The Legal Futures website reported last week that English and Welsh law firms are finally starting to take ABSs seriously and are becoming more amenable to external investment. The bad news: the investors may already have lost interest. “City solicitor Paul Harding, who heads ABS Advisory Partners, said he was ‘absolutely convinced’ that private equity firms were getting ‘cold feet’ because of the difficulties they foresaw from investing in partnerships. … Mr Harding said law firms do not really understand what an investor would require of them. ‘They’re thinking about creating capital value that they can buy and sell, and not looking any further than that. They’re in for a shock. If money is made available, they won’t like the terms.’”

Subsequently, at an ABS-themed conference sponsored by Legal Futures, Richard Susskind issued the same warning: most law firms will not be invited to this party. “Law firms hold few attractions to private equity investors because there is no obvious exit route and little profit, he said, predicting that external investment will be made exclusively in new forms of legal business: ‘These are the businesses that are growing; doubling, tripling, quadrupling every year. Of course they’re going to attract investment.’”

When you think about it, the idea that private equity will bypass law firms and roll straight into new business models makes perfect sense. As any managing partner will tell you, running a typical firm is a task that inspires mythic adjectives like Herculean or Sisyphean. Law firms resist corporate management the way cats resist baths. John Wallbillich at The Wired GC illustrates this perfectly by listing five reasons why law firms couldn’t adopt the Goldman Sachs model:

1. They don’t hire the best and then invest in their development.
2. They don’t honestly evaluate talent at all levels.
3. They don’t make people leave who don’t perform.
4. They don’t directly link pay with performance.
5. They don’t accept downside risk for upside reward.

Savvy investors would balk at an operation that failed on one of these points; most law firms fail on all five. Why would investment firms take on the headache and heartache of trying to corral hundreds of independent lawyers who each insist on professional autonomy and consistently put their own interests ahead of the firm’s? Many law firm partners, if offered cash for an equity position in their firms, would likely take the money and run. Private investors are fully aware that six months after buying your average law firm, they’d be left with a logo, a lease, and an unfunded pension plan.

Much better, from the investment community’s point of view, to start from scratch. Finance a small greenfield firm where lawyers work efficiently, price by value and are committed to the cause. Alternatively, kick the tires on some of these virtual or distributed firms that deliver results without overhead and attitude. Better yet, never mind the lawyers: go find an LPO the way Thomson Reuters did, inject millions of dollars into its operations, and see what happens. Or throw your weight behind a document service company like LegalZoom or a small-firm franchisor like Quality Solicitors. In all these cases, investors will be looking for private companies that think and behave like private companies, not like country clubs with billable-hour targets.

The threat of irrelevance is not limited to either the UK or the ABS world: it represents a general marketplace shift away from the traditional providers of legal services and their bases. The Daily Business Review recently published an account of a conference where in-house counsel from Microsoft and Hewlett-Packard — not exactly lightweight clients — cheerfully described all the ways in which they were slicing millions of dollars off their annual legal spend.

But the Microsoft lawyer also threw in a statement that should make even the biggest and most “prestigious” firms shiver: “‘When I started,’ he said, ‘everything I did … all the regulatory work … was centered in Washington. Now the centers of power are Asia, Sao Paulo and Moscow. … All the complex legal issues these days are outside the United States.” In other words, complex legal issues — the ones that big firms pursue because they pay off so handsomely in money and prestige — are leaving the building. If you’re a US firm that stretches no farther than the continental 48, that’s a problem.

A year or so ago, I quoted a Seth Godin observation: “When the platform changes, the leaders change.” I think that process is now underway in the law: a shift in the marketplace environment that has a very good chance of deposing incumbents and producing brand new players. Twelve months from now, when the first ABS dollars start circulating through the system worldwide, we should start to see that shift manifest itself.

Law firms that want to survive this change could stand to do a lot of things, but they might be best advised to start with management. Specifically, they could junk a model where the owners manage the business, manage it according to their individual short-term interests, and treat the firm as a means to an end rather than an end in itself. The global legal market is about to hand down a verdict on that model: it doesn’t deliver what we need. It’s irrelevant.

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.

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.

The title of the piece is meant to be a little ironic, because not only were these four not “pirates” in any persuasive definition of the term (they’re all now associated with legitimate enterprises), but they also failed to usher in an era of universal free content exchange — and they deny that that was ever their intent. What they really wanted, the article suggests, was for content to be “free” in the sense of “freedom” — that the purchasers of content should be able to do what they liked with that content once they’ve purchased it.

But the article also suggests that these four men laid the groundwork for what has become the first successful — spectacularly successful — application of online content distribution: iTunes. Steve Jobs’ masterstroke succeeds where the likes of Napster and LimeWire and Gnutella failed for a host of reasons, including Apple’s steely negotiating skills and marketplace leverage gained through the success of the iPod. But a major factor in Apple’s success lay in the simple, accessible, appealing design of its products: as I’ve written elsewhere, ease of use and pleasing design is the hallmark of all Apple products, and is what I think will propel Apple to the top spot in the future world of online applications. The article’s writer expresses that sentiment with a thought so simple and powerful that it merits its own paragraph:

It turns out that there is something that can compete with free: easy.

That should be a jarring thought for the legal profession, because the same thing is happening to us. No, we’re not being threatened by a Legal Napster that will allow clients to swap legal products they’ve already purchased (not yet, anyway). The threat we’re facing is convenience: the ability of a client to access legal services in an easy, frictionless, and user-friendly manner. Law firms are not convenient vehicles for the development and sale of legal services — well, they’re convenient for lawyers, but not for clients. Law firms of all sizes, from solos to globals, are set up to render legal services in as time-consuming, remote and painstaking a way as possible, partly because it’s profitable, and partly because we’ve never cared all that much about the legal consumer experience.

Well, now it’s game on, because convenience is the battleground where our innovative competitors are massing their troops. These competitors don’t have expensive partners and premises and marketing budgets, and they can’t bring the resources to bear on the market that lawyers can. So they’ve taken different approaches, and one of those is to offer services that are much easier and more convenient for clients. And it turns out that ease and convenience are incredibly important for consumers who are stressed for time, overloaded with options, and in dire need of accessible, personalized attention to help them make their law-related choices.

Convenience is a major part of what LegalZoom sells — check out the pricing structure for many of their products, and you’ll notice that they charge a premium for overnight drafting and delivery of documents. Convenience is a key aspect of contract-assembly services like WhichDraft and Kenneth Adams’ brand-new entry, Koncision. Convenience lies behind the appeal of Allen & Overy’s just-unveiled online tool to track banking compensation laws worldwide. Convenience for the client — making the process of accessing legal services as easy and painless as possible — is the new killer app for this marketplace.

This development is the latest example of a longstanding rule of business finally infiltrating the legal world. It’s called the Buying Hierarchy, and it was first developed by Windermere Associates as a way of explaining the process consumers go through when making their market choices. It’s widely known from its citation in The Innovator’s Dilemma and is summed up nicely here:

Most customers follow a four-phase buying pattern, with only the last phase being based on price. These phases are as follows:

Functionality: Where a product or service meets a certain need or does a certain thing that cannot be accomplished in any other manner.

Reliability: When two or more competitors offer similar products that have the same functionality, consumers turn to the competitor whose product offers the better reliability.

Convenience: When competitors have products or services that offer the same functionality and the same relative reliability, consumers turn to convenience – those products that are the most convenient to use and the companies that are the most convenient to work with.

Price: When competitors all have similar products or services that offer all the attributes above in very similar manners, then the product or service essentially becomes a commodity and at that point must compete on price (following the schools of thought outlined above).

The legal marketplace long ago passed through the first two stages: functionality is widespread (you can find more than one lawyer or law firm in almost any jurisdiction that can carry out a given legal task) and so is reliability (you can also find more than one lawyer or firm that can be trusted to do excellent, reliable work on your legal task). But for decades, our marketplace has been stuck at convenience, and the reason for that is the one David Maister identified years ago: lawyers don’t need to innovate on practice management or client service because lawyers only have to compete with other lawyers.

Why bother adding all sorts of bells and whistles to make life easier for clients when you know full well that no other firm will force you to do so? Why bother investing in online service delivery, or training your lawyers to be fully responsive to client input, or creating systems that allow clients to access their ongoing legal purchases at a time and in a place and in a manner that suits their needs, not the firm’s? Why bother with convenience, when inconvenience is part of both the mystique and the profitability of the profession?

The answer, of course, is that we’re no longer competing just with each other. We’re competing with a host of providers — human and technological, local and foreign, lawyers and everyone else — who don’t make the same assumptions we do and who aren’t all working from the same decades-old playbook. If your firm hasn’t yet grasped the significance of the world’s largest legal information company buying the world’s largest legal process outsourcing company, grasp it now.

The ground rules have changed, and the Buying Hierarchy is coming to the legal marketplace. Convenience matters. Accessibility matters. Making things easy for the client matters. That’s the real New Normal we’re facing, and I suggest we respond to it with a little more urgency than we’ve shown so far. Because once convenience falls, as the Hierarchy demonstrates, the next and final stop on the road is price.

Late last week, Thomson Reuters rocked the legal world (or at least, this corner of it) by announcing it was buying legal process outsourcing provider Pangea3. Coming on the heels of Norton Rose’s merger with/acquisition of firms in Canada and South Africa, it amounts to one of the most momentous weeks in recent marketplace memory. Neither side confirmed the price of the Pangea3 purchase, although sources estimated it between $35 and $40 million, and that would be a good price for Thomson. It’s difficult to overstate just how important this purchase is — it will transform at least two legal industries and quite possibly the whole marketplace. Here’s a quick summary.

1. The legal information market (formerly legal publishing) has been thrown for a loop. It’s been clear for a while that the end of “publishing” per se as a major product category was drawing near, so companies like Thomson and LexisNexis have been branching out into complementary areas. But bringing an LPO into the mix is a whole different story — it’s a gigantic gauntlet that other companies will have difficulty picking up. As Legally India points out, it’s difficult to find any trace of the LPO that Lexis set up in Chennai years ago. Thomson has taken a major step towards fully redefining the legal information sector, and everyone else will have to adjust and respond.

2. Equally, the LPO sector must be in some serious turmoil. This is still a very young industry — some of Pangea3′s original venture capital investors were among those Thomson bought out — and although several of the biggest are pretty well capitalized, Thomson is a financial colossus. If I’m an LPO competing for the same types of clients as Pangea3, I’m suddenly up against pockets much deeper than anything I’ve had to deal with before. This could drive a series of mergers within the industry (a consolidation process that’s already started with UnitedLex’s purchase of LawScribe) or a flight to find similarly global and well-financed partners or buyers. Pangea3′s founders were clear: they went looking for capital, but realized they needed a strategic partner.

3. The law firm marketplace cannot help but take notice of this: the company that used to sell lawyers their textbooks and caselaw databases is now, in effect, competing with them in the delivery of legal services. LPOs don’t need to exist in an either/or relationship with law firms — smart clients are using both, and smart firms and LPOs see each other as partners. But it’s also a fact that most law firms view LPOs, if they view them at all, as a threat to their ability to leverage billable junior work out of associates and “train” those associates (I use the word advisedly) in how deals and cases are structured. Law firms that thought of LPOs as a distant entity need to think again — especially because, with Thomson’s assistance, Pangea3 is going to open more offices in the US.

But for my money, the main event here is the transformation of Thomson Reuters from a company that provided legal support services to law firms and law departments into, well, something brand new. It’s not clear yet that we know what we’ve got on our hands here. Thomson has so many lines plugged into this marketplace that it is on the verge — it might already have tipped over — of changing from an information services company into a whole new beast.

Here’s a quick list of the companies, products and services that operate under the Thomson banner:

• WestLaw: Legal research, legislative and case law resources
• West KM: Knowledge management services for lawyers
• ProLaw: Law practice management software
• Serengeti: Legal task management and workflow systems
• Elite: Financial and practice management systems
• FindLaw: Website development and online marketing
• Hubbard One: Business development technology and solutions
• Hildebrandt Baker Robbins: Law firm management and technology consulting
• GRC Division: Governance, risk and compliance services
• IP Services: Patent research and analysis, trademark research and protection
• TrustLaw: Global hub for pro bono legal work
• Pangea3: Legal process outsourcing services

Missing from that list is BAR-BRI, the bar exam training and preparation company that Thomson purchased several years ago — and that, at the same time as it announced the Pangea3 purchase, Thomson also put up for sale. Above The Law drew some reasonable inferences from the fact that Thomson is getting out of the business of helping US lawyers enter the profession and is getting into the business of competing with the firms that would be hiring those lawyers. In terms of a clear signal about where Thomson thinks the marketplace is heading, it’s difficult to beat that.

Thomson has 55,000 employees in 100 countries worldwide, and although only a minority of those employees are in the legal area, that is still a number that dwarfs the world’s biggest law firms and is within shouting distance of the accounting giants that dominate the professional services landscape. Most importantly, Thomson is in the business of information and systems, and those are two of the keys to the future development of this marketplace. Peter Warwick, Thomson’s president and CEO, says that his company’s mission is “to help the legal system perform better, every day, worldwide.” Right now, Thomson is doing everything within that system other than the actual practice of law — and in a post-Legal Services Act age, Pangea3 is an awfully big step in that direction.

Something very big is going on, right now, in the legal services marketplace, and Thomson just became a major part of it. Get ready for a constellation of domino effects throughout the marketplace in response — and try not to stand in the way of any oncoming dominoes.

The only thing more striking than the dismantling of these former powerhouse franchises is the speed at which they’re coming apart. Blockbuster, Virgin and Borders were corporate giants with global reach and massive brand strength. Yet today, when you think of videos, music and books, you first think of Netflix, iTunes and Amazon, companies that launched in 2001, 1999 and 1995, respectively. How did the mighty fall so swiftly?

James Surowiecki asks that very question in a recent New Yorker column, citing not just Blockbuster but other former “category killers” like Home Depot, Toys R Us, and Circuit City, companies that dominated the “big-box” developments that spread like wildfire throughout suburbia over the last few decades. These stores were also giants in their day, but today each is either struggling badly in the new economy or has already sunk beneath the waves. Surowiecki puts his finger on the problem in three paragraphs that every law firm leader should read and take to heart:

The problem — in Blockbuster’s case, at least — was that the very features that people thought were strengths turned out to be weaknesses. Blockbuster’s huge investment, both literally and psychologically, in traditional stores made it slow to recognize the Web’s importance: in 2002, it was still calling the Net a “niche” market. And it wasn’t just the Net. Blockbuster was late on everything — online rentals, Redbox-style kiosks, streaming video.

There was a time when customers had few alternatives, so they tolerated the chain’s limited stock, exorbitant late fees … and absence of good advice about what to watch. But, once Netflix came along, it became clear that you could have tremendous variety, keep movies as long as you liked, and, thanks to the Netflix recommendation engine, actually get some serviceable advice. (Places like Netflix and Amazon have demonstrated the great irony that computer algorithms can provide a more personalized and engaging customer experience than many physical stores.) …

Why didn’t Blockbuster evolve more quickly? In part, it was because of what you could call the “internal constituency” problem: the company was full of people who had been there when bricks-and-mortar stores were hugely profitable, and who couldn’t believe that those days were gone for good. Blockbuster treated its thousands of stores as if they were a protective moat, when in fact they were the business equivalent of the Maginot Line.

What happened to Blockbuster and Virgin and Circuit City is now starting to happen to law firms, for all the same reasons. Firms have invested heavily in legacy costs like long-term leases of downtown offices with rich interiors, and have resolutely refused to take the internet seriously as a service delivery vehicle. They have thrived from the absence of client choice, but will suffer as new competitors offer more options and, ironically, more personalized service. Firms aren’t evolving because they can’t evolve: the lawyers within these firms are so invested financially and emotionally in the old structure that they can’t believe things could change.

It’s difficult to see how the outcome for our profession will be any different, because like Blockbuster, we aren’t even trying to adapt. Almost all the innovation in the legal marketplace is now taking place outside of law firms or on their periphery. Contract lawyers work from home, legal process outsourcers work from Mumbai or Manila, LegalZoom works entirely on the internet — these entities are the drivers of change today. The happy result for clients is a fractured marketplace in which they’ll have their choice of which providers to provide which services in which priority.

If you want to see what the client of the future looks like, in fact, take a good look at Colt Technology Services, a UK-based Europe-wide IT company profiled this week in The Lawyer. Colt’s GC uses a combination of providers, including law firms, an offshore captive operation, contract lawyers, and Berwin Leighton Paisner’s revolutionary Lawyers On Demand service, to meet his company’s legal needs. This is an established client trend towards using a portfolio of legal providers, and law firms should be aware of it by now.

But what really concerns me is this: where is the strategic response from law firms to the revolution outside their gates? Where are the signs that firms recognize the existential threats to their marketplace position and are reacting accordingly?

Here’s an example: last month, Bloomberg BusinessWeek published a cover story about Diapers.com, a sort of Amazon.com for baby and infant products that looked to be the next evolution in online shopping. Its founders were quoted in the article as saying they’d welcome a price war with Amazon, and the article was in fact titled “What Amazon Fears Most.” This week, Amazon announced it had bought out Diapers.com for a truly stunning $545 million. That is how you handle upstart competition that threatens your market position.

So what are law firms, facing the same kind of threat, doing these days? Merging with each other, of course: mergers within the United States, within Canada and across the Atlantic, with more surely to come. Same old response, same old thinking. Where are the law firms buying out LPOs and bringing them in-house? Where are the law firms adapting the online delivery methods of startups? Where are the law firms that recognize the peril of their position and are moving to thwart, or to transform themselves into, their smaller, swifter, hungrier new rivals? They’re nowhere to be found, and that’s why the future of law firms looks a lot more like Blockbuster than Netflix.

Surowiecki concludes his article with an observation that readers of The Innovator’s Dilemma will find familiar: “Sometimes you have to destroy your business to save it.” Law firms, unfortunately for them, don’t come with self-destruct buttons.

Here are some detailed accounts of the Panorama broadcast and of the resulting controversy. Briefly: the program uncovered several instances of will-writers who exploited their clients through massive overcharging, shoddy workmanship, and even outright fraud. The abusive will-writers were neither lawyers nor (evidently) members in good standing of one of the professional will-writing associations that have evolved with the 2007 passage of the Legal Services Act. That statute divides legal services into “reserved legal activities,” which are exclusive to lawyers, and “legal activities,” which are not exclusive to lawyers and are not otherwise subject to specific regulation. Will-writing is not included in the former category and, therefore, is considered an unregulated activity.

In the wake of the broadcast and the public recriminations that accompanied it, the relevant authorities are now under pressure to take swift action. The Legal Services Board, the overarching regulator of all legal professionals in England & Wales, has promised to fast-track a debate and decision regarding whether will-writing should be added to the list of “reserved legal activities” and given exclusively to lawyers. (The Law Society of Scotland is already pushing such measures forward.) An interview with two officials from the Law Society of England & Wales sums up lawyers’ concerns with the current situation (which will be familiar to all advocates of lawyers’ role in legal services provision):

It is the presence of untrained and unregulated people working in the area that has led to a range of problems that can adversely affect consumers, Clarke and Roberts insist. “A lot of clients don’t understand making a will can be a complex process. They think it should be simple, but often it’s much more involved due to the presence of step-children, property and other assets in other countries and lots of other issues which are a part of modern life,” Roberts notes.

Unregulated will writers who lack legal training often fail to understand the legal complexities themselves. “One I know was going to make a will for a large estate which would have been involved, so he merely suggested everything be left to a trustee who could sort it all out as he saw fit. All solicitors are not infallible, but experienced solicitors will understand how to deal with complex estates and take account of all the eventualities so the testator’s wishes will be realised and the estate can be properly managed,” says Roberts.

You can see where all this is likely to lead: to the designation of will-writing as a reserved legal activity under the Legal Services Act. In one respect, it’s difficult to argue against this turn of events. The abuse of unsophisticated consumers, many of them elderly or impoverished, is repugnant and needs to be stopped in its tracks. Solicitors, as noted, aren’t perfect, but they come with a guarantee of education and training and they are backed by insurance funds that can reimburse clients who’ve been poorly served. Wills and estates, in many cases, are not cut-and-dried matters and they can require sophisticated advice, especially at a time of generational change when demand for estate law help will only rise.

Given all that, making will-writing a reserved legal activity seems like a no-brainer. And yet, there are good reasons for the Legal Services Board to proceed with caution here.

To begin with, it’s not entirely accurate to call will-writing an “unregulated activity.” Consumer protection laws are in force precisely to protect the buyers of commercial services that fall outside specific regulatory schemes; moreover, the last time I checked, fraud is still on the books in Britain as a criminal offence. Provisions already exist in Acts and regulations to protect people from the incompetent and unscrupulous and to prosecute such predators where necessary.

Secondly, the current absence of a specific regulatory system for will-writing doesn’t mean that the only alternatives are full lawyer control or unfettered market freedom. The Institute of Professional Willwriters, one of the recognized will-writing groups, will happily remind you that it is the only organization of its type whose Code of Practice has been approved by the Office of Fair Trading. Self-regulation by the will-writing industry down the road is not out of the question, nor is the creation of a specific will-writing regulatory scheme that doesn’t restrict this area of practice to lawyers.

Thirdly, access to justice issues arise whenever a decision is made to restrict an activity to the legal profession. Part of the reason for the huge upsurge in will-writing services in the UK is that less than half of Britons have a will; considering that lawyers have had every chance to exploit this latent market and have failed to do so, it’s hard to make the case that they should now have exclusive rights to this practice area (especially since lawyer regulation tends to drive up costs). The legal profession and the government jointly own responsibility for a failure to educate the public in this area, with the result that, for example, 67% of consumers wrongly believe all will-writers are solicitors.

Fourthly and most importantly, the whole question of what should constitute a “reserved legal activity” hasn’t received nearly enough scrutiny. That’s the conclusion of a just-released report sponsored by the Legal Services Board and written by Stephen Mayson, the widely respected director of the Legal Services Policy Institute. In his report,

Mayson said he had found the origins of the six activities currently reserved to be “remarkably obscure,” with “little basis for suggesting a common policy rationale that justifies their existence”. For example, he discovered that the conveyancing monopoly came about in 1804 when Prime Minister Pitt the Younger wanted to appease a profession unhappy with his plans to increase taxes on articles of clerkship and practising fees. Professor Mayson said it would be “unwise to consider any particular legal activity for inclusion or exclusion in the absence of a broader set of criteria that could be generally applied.”

So there are good reasons for England & Wales to think twice before reflexively placing the writing of wills under the exclusive authority of the legal profession. But if you’re a North American lawyer who practises something other than wills and estates, and you’ve made it this far into this post, you’re probably wondering what possible relevance this has to you. I’d argue it has great relevance, because this looks like the first major skirmish in what will be a decade-long war over a crucial question: what should be classified as “lawyer services” and what can be classified merely as “legal services”?

We’ve tended to use “legal services” and “lawyer services” more or less interchangeably over the years, such that “legal services” has become a virtual synonym for “the practice of law” (lawyers have not hesitated to encourage this blurring of lines). But the will-writing controversy forces us to think about law-related services that, for reasons of both marketplace efficiency and access to justice, could and perhaps should be kept outside the strict ambit of the legal profession. Granted that a Wild-West free-for-all wills market serves no one’s interests: is the opposite end of the spectrum, wills kept under lawyers’ lock and key, the best alternative? Isn’t the middle ground worth at least some exploration and settlement?

Consider another example, a growing force coming from the opposite direction: legal process outsourcing. Three recent articles explore the impact of LPOs on the traditional big-firm business model, and I recommend a thorough reading of all three:

• Steven Harper of Northwestern University Faculty of Law suggests that outsourcing is The New and Improved Business Model Law Firms Need;
• Bruce MacEwen of Adam Smith Esq., describes LPO’s challenge to law firms starkly, as Innovators at the Barricades; and
• Ron Friedmann of LPO Integreon asks: Will Legal Outsourcing Drive Law Firm Innovation?

If I can try to summarize the thrust of three lengthy and insightful pieces, it seems to be that:

• LPOs and other non-traditional legal service providers are taking a growing amount of once-profitable associate-level work from law firms,
• the unbundling model upon which these new providers are based is changing client expectations about where and how certain types of legal services are purchased, and
• the result will be law firms with work of less quantity but higher quality, which will inter alia benefit the quality of a legal career generally.

LPOs, essentially, are forcing law firms (and their clients) to ask the critical question of our times: is a lawyer really the best choice to do X? The answer in many cases is yes, especially when the job calls for the kind of judgment, nuance, skill and wisdom that lawyers bring to the best of their work. These are “lawyer services.”

But in many other cases, the answer is no: all or parts of tasks such as document review, due diligence, electronic discovery, document drafting and production, small-claims court representation, and basic transactions like house purchases, straightforward divorces, and as the current situation in England & Wales suggests, wills and estates, don’t always need a lawyer’s attention. Should the providers of these services, whomever they are, be qualified and trustworthy? Of course. Must they always be lawyers? I think the answer is: of course not.

As time goes on, “legal services” will come to mean “commercial services related to the exercise of law-related rights and the fulfillment of law-related responsibilities,” without the necessary inclusion of lawyers. “Lawyer services” will be a sub-category defined as “legal services that, for reasons of required skill and/or public protection, are provided exclusively by lawyers.” “Legal services” will be offered by a wide variety of domestic and foreign providers, none of whom need to be lawyers; their regulation will be specific to the competence required, and access to these services will be available more widely than when lawyers offered them more or less exclusively. “Lawyer services” will be the cream of what we now consider to be the very deep crop of lawyer activities, only the most challenging and the most valuable to clients.

There’s nothing novel about this kind of distinction in professional services.

• Richard Susskind quotes the statistic that 4% of health-care services are provided by doctors, while 50% of legal services are provided by lawyers. We accept a distinction between “health” services (delivered by nurses, physiotherapists, massage therapists, psychiatrists, and many other “health practitioners”) and “medical” services (delivered by medical doctors — the word “medical” itself is derived from the Latin for “physician”).
• When we go to have our teeth checked, we usually spend most of our time with a “dental assistant” and only the last few minutes with the “dentist.”
• We use “architects” and “engineers” to design our homes and buildings, but we hire “contractors” and “tradespeople” to implement designs and renovations through actual construction — the heavy lifting, literally.

We accept all these situations as normal because the markets for these professional services have evolved to allow the most skilled professionals to do the highest-end, highest-value work and an army of other professionals, para-professionals and skilled craftspeople (usually under specific regulatory or quasi-regulatory regimes) to carry out the rest of the work. Doing it any other way — requiring medical doctors to give flu shots, obliging dentists to deliver teeth-cleaning, requiring engineers to lay bricks — would result in massive system backlogs, huge price increases, and widespread dissatisfaction by both the professional and the client — in other words, pretty much the situation we have now in the legal marketplace.

The legal marketplace, whether some lawyers like it or not, is heading towards the same kind of stratification as other professional fields, to a massive “sorting out” of what lawyers need to do and what they don’t need to do. It’s immaterial whether this is brought about by regulation or the marketplace; in the end, these two forces will be working in virtual lockstep to effect change. There will be a period of disruption, maybe even chaos, as we figure out how certain legal services are best delivered by non-lawyers; it won’t be a tidy process, and there will be damage of the kind suffered by will consumers in the UK (and associates in large law firms). But every marketplace has had to go through this, and if doctors could see their way clear to allow non-doctors to take on the sacred duty of preserving life and promoting health, I think lawyers can bring themselves to make a similar commitment.

This is what the next decade will bring: a Great Sorting Out of demand for legal services, as the market reviews its choices and decides where and from whom it wants to acquire what it needs. As time goes by, the category of “legal services” will grow by volume, while “lawyer services” will shrink by volume; but both categories, paradoxically, will grow in quality. Lawyers in particular will benefit from a task list that requires more sophistication and higher-level skills. For that reason alone, but also because of the ultimate interests of clients, we should be working to narrow our focus on the highest-level work while simultaneously supporting the development of practices and regimes to oversee the more basic work we used to do. It’s anyone’s guess whether our profession will step up to that challenge.

But what’s real, and what remains, is the widespread public support these figures received and what they represent: a daydream about the courage to quit a job that treats you with less respect than you deserve. And it underlines a serious trend in the workforce to which law firms should be paying close attention. As Daniel Gross explains in a Newsweek commentary, “the poor labour market and workers’ antagonism toward employers and customers are actually connected”:

I was reminded of this observation when reading the latest financial report from a large law firm: “Profits rose, revenue dipped at Baker & McKenzie in fiscal 2010.” I’ve seen a couple dozen of these stories in the mainstream legal press over the past few months, breathlessly announcing what amounts to the same thing over and over: firms are bringing in less money, but partners are reaping higher profits. That happy result comes from the important middle step that the headlines don’t include: “Revenues down, costs slashed in a surge of panic, profits up.”

We all remember the bloodletting committed by large law firms in the wake of the financial crisis, as staffers and junior lawyers found themselves out on the street. The firms that threw their most vulnerable over the side then are the same firms reporting rising profits now. It was ever thus — that’s how businesses work, chopping assets (including people) to ensure continued or improved profits for shareholders. But when you chop and chop, making abundantly clear that employees will always be let go at the first sign of profit trouble, then you also risk the full-scale alienation of your talent pool.

Tens of thousands of 2008-10 law schools grads are still deeply in debt and struggling to find law jobs to stay afloat, even to the point of moving to India to work for an LPO. Many law firm partners, I think, have forgotten just how frustrating and humiliating it can be to have no job and no prospect of finding one — and they never had to look for work in an economy like this, where unemployment shows every sign of becoming chronic. And to rub salt in the wound, the law firms that cast off their young lawyers love to blame the victim, castigating new grads for their “sense of entitlement” and “lack of work ethic.” This can’t continue without inflicting real damage.

There are plenty of archaic traditions in the legal profession that have no place in the 21st century. But one tradition that deserves its place of pride is the responsibility to help usher in the next generation of practitioners. The recognition that today’s juniors are tomorrow’s leaders was sufficiently widespread that firms took care of their people as a matter of course. As stewardship in the legal profession has faded, first gradually and then dramatically, lawyers’ trust in the firm and the partnership has faded with it. This isn’t just something we should feel bad about. This is a collective decision to exploit legal talent at the worst possible time.

Throughout this coming decade, we are going to see the continuous rise of lawyers engaged in legal services but employed by non-lawyer entities. Legal process outsourcers, e-discovery providers, document assembly companies, legal project management experts, legal knowledge professionals, and many other entities outside the law firm world will be hiring experienced lawyers to populate their offices. Law firms that took care of their people in the tough times will have nothing to fear; those that didn’t will be astonished and appalled at how easily their lawyers and legal professionals will be poached. Steven Slater’s real-life jump, no matter how contrived it might have been, reflects employees’ economy-wide readiness to jump from jobs that treat them as fungible, exploitable, and expendable. If that’s how you’ve treated your people, you can look forward to the day when they return the favour.

Two days later, Welch called those same people back into the boardroom and told them he’d changed his mind. When his VPs and senior leaders found these companies and figured out what they were doing to destroy GE’s business, they weren’t to prepare defences against those innovations. They were to adopt them.

In a nutshell, that describes the challenge facing companies in virtually every industry today, especially legacy industries like music, automobiles and publishing where complacency has led to ruin. Very rarely, companies rise to the challenge: consider The Atlantic magazine, which is meeting this innovator’s dilemma by doing exactly what Jack Welch prescribed: reinventing its business model before competitors force it to do so. In the words of the company’s media president:

“‘If our mission was to kill the magazine, what would we do?’” said Smith, who added that a digital competitor was going to do that anyway, so they did it themselves.”

The article continues: “There are so few companies that realize this needs to be a key element of their strategy. Someone else is out there trying to kill them. So do it yourself and reap the rewards.  … [The Atlantic] recognized that digital wasn’t just an adjunct to the print product, but a core element of the brand and the publication. So, they … looked for ways to make the digital product be fantastic on its own. And, now, nearly 40% of the brand’s revenue comes from its online properties….

What GE and The Atlantic saw and responded to, most lawyers and law firms cannot or will not see. Most lawyers are blissfully unaware that they’re in the cross-hairs of numerous entities outside the legal profession, entities that have set their sights on the legal marketplace intending to own some or all of it. These entities know the history of this market very well, and they know that lawyers and law firms own a near-monopoly on legal services thanks mostly to ancient regulatory circumstance. They believe those accidents of history have run their course, and that the field will belong in future to whoever best delivers what the market wants and needs.

Accordingly, these entities are now sizing up the legal profession, looking for weaknesses and soft spots to exploit. They have several advantages, including financing, business savvy, and patience. But their most powerful weapon is their attitude: unlike most lawyers, they believe there’s nothing natural or pre-ordained about lawyers’ domination of the legal services marketplace, and they believe it can be ended within the decade. Very few lawyers believe this, and very few law firms are taking the Jack Welch approach of both knowing your enemy and adopting its methods.

So here’s a primer on your enemy and its reconnaissance efforts. When these entities sit around a table and say, “How can we kill off law firms? What key weaknesses can we exploit?”, here are three answers they’re most likely to come up with, the jugular veins they’re aiming for.

1. Price. Simplest and easiest. Clients of all types and sizes will tell anyone who asks (a group that rarely includes lawyers) that they dislike what they perceive as the high price of legal services and the uncertainty surrounding what the final price will be. Competitors outside the profession have looked at this carefully and concluded that lawyers’ prices are high for two reasons: (1) lawyers are incredibly inefficient, the equivalent of candlelight-workers in the electric age, and (2) lawyers are accustomed to a certain income and lifestyle and, in the absence of real competition, charge high prices to maintain them.

These new entities are hyper-efficient, partly because they come from start-up tech-aligned backgrounds, and partly because they never worked in law firms and weren’t raised in all the assumptions by which lawyers operate. And because they’re outsiders, hungry and ambitious, they start from a much lower level of “necessary income” expectations (it helps that they’re not burdened with tens of thousands of dollars in law school debt from the start). Lawyers can rattle off many reasons why we charge what we do, failing to recognize the fundamental marketplace rule that customers don’t care, not one inch, how much it costs you to provide a product or service. Price is a gaping strategic exposure for lawyers, and competitors have already locked onto it.

2. Intelligence. I don’t, of course, mean this in the sense of raw brain power; lawyers are plenty smart. (One of lawyers’ strategic weaknesses, by the way, is our failure to recognize that we’re not the only or the most gifted smart people in the room). I mean this in the sense of industrial or competitive intelligence, the ability to understand and manipulate the ways in which we and our competitors do business and the costs at which that business is carried out. Most lawyers and law firms have only a rudimentary grasp of these things: business is done the way it’s always been done, from our forefathers’ time: it works and it makes money, so what’s not to like?

Law firms with rich intelligence capacities would know how much it costs them to deliver their services, how much their rivals charge and why, what knowledge its people and systems collectively possess, and how to apply that knowledge in a systematic way. This describes very few actual law firms; but it describes perfectly the competitors now entering the marketplace. They employ elementary principles of business process engineering and more advanced methods of project and knowledge management, they have a knack for getting work done both cheaply and well, and they know their clients and other competitors cold. The legal profession’s counter-intelligence efforts in this regard have been virtually zero, and we are terribly vulnerable as a result.

3. Responsiveness. This concept has several different dimensions, some of which will be familiar to lawyers from client complaints. We don’t call clients back quickly enough or stay in touch often enough; no matter what we may believe of ourselves, client surveys consistently state that as far as our customers are concerned, we’re pretty terrible communicators. It also applies in the sense of lawyers’ failure to properly immerse ourselves in clients’ worlds and priorities, such that our services could be provided in a more timely, appropriate and targeted fashion. These are not insurmountable obstacles: these are simply choices lawyers have made regarding how to go about our work. These new entities, seeing an opening, are choosing otherwise.

But even more fundamentally, “responsiveness” describes a category of weakness that applies to our whole approach to the marketplace. If there’s one thing that strikes competitors from outside the profession about our marketplace, it’s this: why don’t lawyers care that 75%-80% of the population, civilian and corporate, can’t afford lawyers’ services? Never mind the moral argument: what kind of industry or profession is content to let so many fields lie fallow? How can you possibly not care about billions of dollars’ worth of legal service opportunities that go begging to be met (with more to come, as the economy surely worsens)? The legal profession, from all outward appearances, is either clueless about or indifferent to the latent legal market. Rest assured, our new rivals are not.

How do you kill a law firm? Assuming the firm doesn’t die of natural causes or commit suicide, you identify its weaknesses and you exploit them mercilessly, over and over again, until the firm is helpless to defend itself or its client base. Believe me when I say that as targets go, most law firms present themselves as fat, immobile, complacent victims-in-waiting. It’s not too late to prepare defences, and it’s not impossible, no matter how it might seem from the inside, to take the necessary, disruptive-innovation steps to turn your firm into the kind of world-beating champion your rivals hope to become. But time is running very short. Jack Welch took two days to change his mind. How long will it take you?