Is legal ripe for an Uber-like disruption? Some thoughts by Ron Friedmann in Q&A-format:
You’ve been in the legal market for more than 25 years. What do you view as the most important innovations in legal services over that period of time?
- While we have a myriad of new tools and technologies, uptake remains low
- I graduated law school in 1986. Computerized legal research and document assembly were available then
- Arguably the biggest tech changes occurred in the mid-1990s: email and the internet [word processing was available in the 1980s]
- Since then, new tech has been incremental
- Perhaps the bigger innovation is the still-evolving move to LPM / Pricing / Monitoring / Budgeting / AFA. But that’s more about process than tech.
What do you believe are the biggest blind spots for law firms in terms of successfully delivering services in a way that meets client expectations?
- Not having a clear understanding of client preferences re
- Risk and scope
- Approach to pricing
- I think it’s helpful to think of matters across four types
- Bet the company
- High stakes
- Run the company
- Commodity (routine)
- Knowing where each matter sits – and being sure to align with the client’s view – should drive service delivery
You write a lot about change management and process improvement… For law firms, what are the biggest obstacles to changing in a way that allows them to deliver better, more affordable client services?
- Change management is a challenge everywhere, not just in law firms
- Great ideas about how to change have no value without a plan for adoption / change management
- Perhaps the biggest single factor in people changing is a good answer to the “what’s in it for me” question
- Consider consumer behavior
- Starbucks has largely replaced Bunn-o-matics.
- Smart phones have largely replaced flip phones
- Lesson: clear benefits
- Big Law partners who adopt new ways, LPM for example, typically have clients pressuring them. A few see competitive advantage and act on that
There is a general feeling that client pressure, particularly pressure from corporate clients is prompting law firms to deliver better services at lower cost. Is this really happening? Or is corporate not exerting the influence that the narrative suggests?
- To some extent yes but I continue to believe that the corporate bark is worse than the bite
- Not clear how to measure
- But GCs could probably get more change if they were more demanding
- Contrasting the UK with the US illustrates the point
- In the US, firms that built low cost service centers did so mainly to reduce overhead (middle office services)
- In the UK, in contrast, most of the top 30 firms now have low cost service centers where lawyers on paralegals work to deliver lower cost service to clients
- Even though some firms in the US have staff attorneys or non-partner-track lawyers in their low cost centers, the opportunity remains large
- Moreover, uptake of tech is still low and that’s a big opportunity to enhance efficiency
What would it look like for a law firm to deliver “better” services? Give a few examples.
- Know the client’s company and industry better
- Tech: listening platforms
- Understand the client’s goal and risk exposure for each matter, then budget and staff accordingly
- Collaborative discussion to establish budget and risk
- Budgets, monitoring, and LPM
- Alt staffing as required
- Deploy specialized tech, eg, predictive coding or contract analytic tools or doc assembly
- Regularly communicate with clients during the life of the matter and get feedback at the end
- Then act on the feedback
How are law firms like airlines in how they price services?
- Both are confusing and hard to predict
- We know why airline pricing is confusing
- Yield management means price for the same seat changes regularly
- Multiple seat types now exist with confusing names and meanings that vary by aircraft and airline (Plus, Premium, Business, First)
- Many unbundled charges, including checking bags, change fees, and seat selection
- The law firm excuse “It is too complicated to predict” no longer carries weight
In what ways are law firms delivering more innovating, acceptable pricing models?
- We regularly read about alternative fee arrangements (AFA)
- Important to distinguish between “check the box” and “real” AFA
- Check the box means that AFA is a discount or the same old hourly billing re-packaged
- Real means serious budgets, allocation to lower cost resources, and deploying efficiency enhancers (including tech and process improvement)
- The key is that real AFA means doing the work differently, not just pricing differently
I think there’s an assumption that the legal industry, and particularly law firms, will continue to change only at a deliberate pace, because it is naturally resistant to change. But we’ve recently seen other stagnant industries turned on their heads literally overnight (cab services, for instance). Is legal susceptible to that kind of dramatic disruption?
- If we have not seen disruption post the 2008-10 crisis, why would we see it now or in the future?
- Law lives in a walled garden: regulations are a big barrier.
- But even in the UK, with ABS, change has not been dramatic
- As noted, however, law firms there do have low cost client service centers
- And some of the Magic Circle firms have a range of programs – alt staffing, continuous improvement, and online services
- And, as I suggested earlier, GCs are less aggressive in practice than in talk
- So I don’t see much prospect for disruption
Explain the concept of #DoLessLaw.
- I needed a reasonably short phrase so that the Twitter hashtag did not take too many characters
- And I wanted an intentionally provocative phrase in the hope of spurring conversations
- The idea is that lawyers generally over invest in solving client problems and advising clients
- My hypothesis is that clearer discussions of client risk appetite would allow lawyers to do less work
- Why look for every mote of dust if the client is only concerned about rocks as big as your fist?
- Beyond risk-adjustments, lawyers have plenty of room to practice better
- Process improvement
- Lower cost resources
This interview was originally published on LinkedIn by Ron Friedmann and is re-published here with the permission of the author.
Ron Friedmann is an expert in law practice management, outsourcing, knowledge management, e-discovery, legal marketing, and technology for lawyers. Ron helps law firms increase profits by improving law practice and legal business management with technology, better resource selection, KM, deep client understanding, and process improvement. He helps law departments “do more with less.” Ron is a consultant with Fireman & Company. Previously, he worked fours years at the leading legal outsourcing company, Integreon, first running global marketing, then heading US consulting for legal operations and transformation.