The evolution of the legal services market: Stage 3

In the first two parts of this series, we looked at the traditional legal marketplace that held sway for many decades and the current disruption in the market caused by new technology, new competition and new regulation. Today I want to extend the time horizon a few more years and suggest what Stage 3 of the market’s evolution will look like.

Stage Three: The Fully Open Market


(a) The Market:

  • Multiple legitimate providers now fully active in legal market. Lawyers battling many competitors for market share.
  • Regulatory reform eventually sweeps away most remaining barriers to competition; only a small, high-value portion of legal work is reserved exclusively to lawyers.
  • Legal knowledge and tools are almost universally available and adaptable through the internet. Emergence of first industry standards in these areas.
  • Many consumer legal services shift from lawyers to non-lawyer providers; closure of numerous solo and small-firm law practices that cannot adapt.
  • Much corporate/institutional legal work shifts from law firms to non-firm providers; most midsize and large law firms downsize dramatically, some close.
  • Extreme efficiency: systems and software take on most paper, process and product work, plus growing amount of legal reasoning and analysis work.
  • “Non-lawyers” evolve rapidly to fill in new gaps in the market and serve clients directly; development and enforcement of non-lawyer standards and protocols.
  • Competition drives systemic improvements. Both surviving law firms and new legal enterprises make routine use of outsourcing, unbundling, software, project management, etc.
  • Golden age of legal technology: unprecedented volume and breadth of both individual and enterprise applications disrupt even innovative law firms.
  • Client access to legal services has never been greater. Prices for most services drop to their lowest levels in recent memory, some to true commodity levels ($0).

(b) Lawyers:

  • Growth of the legal profession stalls, then reverses for the first time in memory.
  • Traditional volume-based lawyer organizations (bar groups, publishers, CLE providers, etc.) either radically reinvent themselves or close.
  • Substantial number of law schools close or dramatically downsize; many adopt practical training offerings to compete for new students or serve practicing lawyers.
  • Lawyer self-governance survives, albeit with stricter standards for admission, discipline, and continuing competence.
  • Lawyer governance of the legal market comes to an end; governments or government agencies take over legal services regulation.
  • Legal jobs do disappear, even from outsourced destinations. Machines and systems partially or fully displace many lawyers from tasks they have traditionally performed.
  • The first new solo and small-firm practices begin to emerge: mobile, virtual, highly specialized, systematized, collaborative, and project-based.
  • The first truly global legal providers emerge on a scale not seen before (10,000+ employees, lawyers and non-lawyers). Massive law firm merger activity.

Era: 2016-2024

This stage is the logical conclusion of the period of creative destruction that began in Stage 2. The legal market is long overdue for some serious disruption, and much of this pent-up activity should be released late this decade and early next. Again, the key elements driving change are the lowering of barriers to non-lawyer ownership capital and competition, and the explosion of technology that displaces, or occasionally fully replaces, lawyers. Incumbents will have a hard time of it.

There is a steep price to be paid by lawyers during this period of market evolution: work that we had always assumed was within our exclusive bailiwick falls increasingly to providers outside our profession. Lawyers feel under siege on all sides, unable to rely on traditional defences supplied by governing bodies (many of which no longer regulate the market) and bar associations (many of which will lose critical masses of members and be unable to perform traditional professional advocacy functions). Many lawyers find themselves adrift in the market, in search of a purpose: what value do we provide? What tasks will pay the rent? Lawyers who graduated into the chaos of the 2010s are especially hard-pressed. This is one of the major factors that will drive an eventual widespread forgiveness of law school debt (part of a society-wide student debt forgiveness movement).

This is probably the nadir of lawyer employment, and there is much talk of a “lost generation” of lawyers who enrolled in law school just as Stage 1 was drawing to a close. In Stage 2, law firms downsized, but at least there were opportunities for contract work or entry-level tasks with LPOs or other low-cost providers. During Stage 3, however, even many of those jobs disappear into algorithms, software packages and artificially intelligent online programs. In addition, for reasons of both advancing age and shrinking opportunities, the Boomer generation finally departs the scene. The result, over time, is a smaller legal profession.

By this point in the market’s evolution, the supply curve has responded to the change in demand: law school enrolment is a shadow of its former volume, and schools are forced either to severely reduce their class sizes, merge with other faculties, or, in many cases, simply close their doors. This period sees the emergence of “non-school” legal education providers: private corporations that buy struggling law schools from their universities and turn them into training centers for both pre- and post-call lawyers, absorbing many CLE providers along the way.

The news is not all grim for lawyers. Stage 3 also gives us the first signs of the new law firm world — mobile virtual solos and streamlined mega-firms, to name two of the first species to emerge.

“Sole practice” has long been virtually synonymous with “general practice,” but solos in this era develop niche practices and hone unique skills in order to serve very specific markets over a wide geographic area. Small law firms also collaborate extensively with other solo and small practices, often coordinated by a  “general contractor” who assembles mix-and-match teams of solo specialists for specific one-off projects. What was once referred to as “general practice” work is more often the purview of large corporate entities that employ both lawyers and non-lawyers (criminal defence work remains the exception: matters of life and liberty still belong to lawyers).

Large law firms also adapt to the new ecosystem. The generic national or international “one size fits all” full-service firm is largely a thing of the past. Successful mega-firms are now truly gargantuan, growing to levels that make even the Big 4 accounting firms take notice. They are certainly not partnerships, vulnerable to the whims of powerful individual lawyers; they are businesses whose employees (many lawyers, but not all) support a defined culture of expectations and performance and adhere strictly to systems and management designed to maximize productivity and minimize waste. Super-boutiques also emerge to dominate particular practice or industry areas, also with a strong corporate infrastructure. Lawyers do not just lose control over the legal market; increasingly, they lose control within law firms.

The end of lawyers’ monopoly over legal services comes as something of a shock to everyone. This is not an easy or a clean transition: regulatory oversight of non-lawyer providers struggles in its early years, and there are some notable scandals whereby clients are systematically abused by unscrupulous providers. Many lawyers cannot resist the temptation to say “I told you so” when professional standards are seen to slip.

Significantly, however, despite some high-profile incidents of malfeasance among non-lawyer providers and the predictable failures of some ABSs, the new market dynamics work well. Regulation of the legal market hits its stride. Consumers of legal services, offered more choices, also become better-informed and more sophisticated. Lawyers, freed from paperwork, focus on higher-value tasks that better engage their talents. More people have more access to legal services appropriately aligned to their circumstances than ever before.

Once again, the dates suggested for this era are mostly guesswork. The real question is timing: How long will lawyers be able to maintain ring-fenced protection of the legal services market from outside intervention? The longer we can hold out, the longer this process will take, and it could be delayed for several years beyond this estimated timeline. But the end result will be the same. The “non-lawyer” genie is out of the bottle and it is not going back in.

But just as importantly, the world is not standing still while all this happens. Years of slow growth will come to a sudden end with a roar of renewed economic activity towards the end of this decade. Lawyers have not been idle, simply standing in the middle of the road waiting to be run over; they have been adapting as well.  These fallow years, as we’ll see in tomorrow’s instalment, are also setting the stage for the dynamic legal market and resurgent legal profession to come.

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.


  1. John J Tollefsen

    Jordan, have you considered what an explosion of litigation due to inexpensive access to legal (perhaps non-lawyer) expertise would do to the system? It would seem likely that many of those who are dragged into court by inexperienced or pro se litigants would want experienced counsel to extricate themselves from a court system that is hopelessly overwhelmed by the proliferation of new cases. There may major opportunities for experienced litigators.

  2. Jordan Furlong

    John, I’ll be touching on this to some extent in Part 4 tomorrow. Part of the answer is that courts themselves will adjust to these new forces, changing the dynamics around litigation. I do foresee an increase in lawyer work, although not in precisely this manner…..

  3. Bill Lipner

    I have really enjoyed your series, and have covered in today’s issue of the Legal Administrator Daily (from Pinhawk).

  4. Leah Beckham

    I see these changes creeping into the law firm environment every day and wonder when those who’ve grown so comfortable with past success in this business will see it. I hear buzz about these shifts among career lawyers, but nothing with regard to developing new procesess that incorporate non-lawyers.

    There is a really nice oppportunity for those who will!

  5. James Hannigan

    Jordan – how do you see regulatory control of legal services diminishing in the US? We know what’s going on in the UK and elsewhere but little sign of it here.

  6. Jordan Furlong

    James, thanks for your comment! Interestingly, a friend of mine just today forwarded me an email from the Solicitors Regulation Authority (SRA) in England & Wales, promoting a webinar about how to become an English solicitor. My friend and I both agreed that this was part of an effort to make English law the default for choice of law and DR clauses in contracts, to make English law more accessible globally, and to give the UK home-field advantage generally in jurisdiction, bar admission and governance for the future legal profession. England would like English law to be the world’s standard and is taking steps to facilitate that.

    It’s a smart move, and one that’s possible only because England & Wales has a unified bar (the traditional divisions among barristers, solicitors, licensed conveyancers, etc. are starting to become less important under the overall aegis of the Legal Services Board). The United States can’t do this — 50 jurisdictions (51 if Puerto Rico does become a state), 50 regulatory regimes, a piecemeal approach to governing a nationwide profession. And that’s only one example of the disadvantage that US lawyers suffer by lack of a national regulator. (Canada is in no better shape, for what it’s worth).

    Now, along come the Legal Services Act and Alternative Business Structures, and England & Wales is now the world’s legal laboratory and magnet for innovation and investment. Some powerful legal entities are going to emerge from that lab, and they’re going to want a piece of America’s $260 billion legal market. And if, as I expect, these entities can provide efficient, effective, streamlined corporate law services, American clients are going to want to use them. If they can’t use them on US soil, they’ll find other ways to do it. (Take a look at Riverview Law, the investor-powered DLA-Piper-affiliated corporate law firm that works on a flat-fee basis — it is growing exponentially in the UK and already has a US presence in New York.)

    What’s going to happen to the American legal regulatory system is this: competition. England is counting on professional services to be a linchpin of its future economy, and one of the reasons it broke down the barriers to non-lawyer ownership and encouraged private-sector involvement in the legal market was because it wants to breed global champions. It has created a new regulatory system to enable that, and it believes that system will prove superior to America’s scattershot and reactionary approach.

    I think many clients will agree. I think more than a few law firms will agree. Keep an eye on the New York City Bar Association, whose members have the most to lose if major corporate legal work jumps the pond to London. New York State has enacted some of the most stringent regulations against UK-style innovation. What would happen if the NYCBA defied the NYSBA? In a contest between Albany and Manhattan, my money’s on the skyscrapers.

    All it will take is one US jurisdiction to embrace non-lawyer ownership, one state to decide it wants to be the Delaware of legal incorporation. (I know DC has this power on paper, but it hasn’t moved strongly towards ABS and I doubt it will.) If one domino falls, others will follow, because no one wants to be at a disadvantage. This won’t happen overnight — as this series suggest, it will probably take the rest of this decade — but it will happen. Law is a global business and a global profession, and innovations like ABS simply aren’t going to be halted by water.

  7. MJ

    If a 2012 graduate, what steps can you take to prepare? How can you position yourself to take advantage of all this? It mostly just sounds scary.

  8. James Jensen

    Non lawyers owning law firms.. I have one word.. Hospitals… Look at the history of corporations taking over the medical field.. That will be your future.

    IRT MJ…. Embrace technology and keep on reading anything Jordan prints… The only difference between Jordan and Nostradamus is the quatrains…

    I have spent the past three years studying the business of the legal field. Looking at how technologies can be applied and what they will do to the business of law. Many of Jordan’s views parallel what I have found in my research and studies. Under the direction of Mark Moran, an attorney in St. Louis, I have learned so much about the business of law and it’s shocking to see just how close our findings are to what Jordan has put together here.

    Lawyers should pay close attention to this man… He is a guiding light to your future.

  9. Jordan Furlong

    MJ, thanks for your question! It deserves a much longer answer than I can give here, and hopefully I can crank out a blog post about it next month. In the meantime, the best I can do is refer you to what I’ve written on the subject in previous months and years:

    “Out of law school, into a recession,” January 2008:

    “Core competence: 6 new skills now required of lawyers,” July 2008:

    “Graduating into a recession,” May 2009:

    “Disruption, change and the future of legal education,” [interview], January 2012 (last 3 paragraphs):

    “The future of legal employment,” July 2012 (last 3 paragraphs):

    If you only have time to read one of these, I’d probably recommend the third.

    I also recorded a podcast on this topic with Rachel Rodgers in September 2011 — a 10-minute excerpt can be found here:

  10. Ernest

    nice game

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