The De-Lawyering of Law Firms

by JD Supra Perspectives
Contact

[Excerpt from Law Is A Buyer’s Market: Building a Client-First Law Firm, published March 2017 by Jordan Furlong, a legal market analyst and consultant who forecasts the future development of the legal services environment:]

It’s not exactly a secret within the legal industry that lawyers aren’t the easiest assets to manage. As a general rule, they tend to be expensive, autonomous, difficult to lead, and prone to decamp to competing businesses without warning. The more experienced and expert the lawyer, the more these characteristics will manifest themselves. 

But lawyers are also the power source, the “engine room,” of the traditional law firm. Law firms’ ownership, profit-sharing, workflow, billing, compensation, governance, and culture all revolve around lawyers. Law firms’ naming conventions are based on the surnames of individual founding lawyers. Law firms go so far as to divide their personnel into two airtight categories: lawyers, and everybody else (a.k.a. “non-lawyers”). If a law firm’s lawyers don’t believe something is worth doing, the firm ain’t doing it. 

Lawyers, in other words, are absolutely essential to the traditional law firm — not just to the firm’s revenue and sales, but also to its very definition and identity. I suspect the only reason we say “law firm” rather than “lawyer firm” is to economize on syllables.

This model is now, however, slowly giving way to a new vision of law firms, one that revolves not around lawyers, but around the firm’s capacity to deliver services of value to clients. The new law firm’s “engine room” is not comprised of collected lawyers, but of collected legal expertise, applied to client needs through the use of systems, processes, technology, and expert professionals, as well as of lawyers. 

...law firms are discovering that they can provide some legal services to clients using only applied knowledge resources and technology. This is going to change everything.

A potent combination of advanced technology, powerful databases, sophisticated analytics, and streamlined procedures is enabling law firms to deliver solutions to clients without necessarily requiring the real-time application of lawyers’ efforts. Put differently, law firms are discovering that they can provide some legal services to clients using only applied knowledge resources and technology. This is going to change everything.

The Embedded Lawyer

AI methodologies that perform straightforward legal processes hundreds of times faster than the traditional use of human labor; fee-based online dashboards that help corporate clients navigate the financial regulatory landscape; powerful analytical tools that calculate potential client damages in class actions and proactively identify litigation risks. 

All these technology-powered products and services can be considered “productivity engines.” They enhance their user’s ability to complete a task or achieve a solution while reducing the amount of time and money required to reach that goal. They are going to populate and power the “engine rooms” of tomorrow’s law firms.

The new law firm’s “engine room” is not comprised of collected lawyers, but of collected legal expertise, applied to client needs...

These high-tech productivity engines share two characteristics. The first is that, yes, lawyers’ efforts and knowledge invariably contributed to their development. Expert systems, for example, require lawyers’ expertise to populate the databases and provide direction to the algorithms that will make decisions. 

But lawyers are not required to directly deploy their efforts and knowledge for clients’ use in real time. Their expertise has been distilled and “embedded” within the system, so that it can be applied over and over again, many times a day in many different locations by many different clients. Lawyers are needed at various stages to help build the systems that carry out this work. But lawyers are not needed to actually carry out the work themselves. Clients can access a lawyer’s expertise directly, alone, without having to call the lawyer up and set the timer running. 

The Information Imperative

The second characteristic shared by these productivity engines is that in almost every case, the core element of the offering is information: both legal knowledge and non-legal data, applied and leveraged by technology. Every law firm in the world possesses information, whether assembled in precedents kept inside servers and filing cabinets, stored up in libraries and online subscription services, or tucked away in the labyrinthine recesses of their lawyers’ brains. 

For law firms, information has always been a static resource, tapped when required but otherwise lying latent and dormant. The development of productivity engines is transforming that information into an active, dynamic resource, an asset that can provide value all on its own, without needing to be picked up and wielded by a human with a J.D. 

...in almost every case, the core element of the offering is information.

Up until now, to provide legal solutions of value to their clients, law firms could only deploy lawyers, or the occasional experienced clerk or paralegal. Today, however, firms can also unleash their information through advanced systems that can deliver answers and solutions. Several already do.

This means that for the first time, law firms have other resource options beyond lawyers alone for the development and delivery of value to clients. They can access, analyze, and apply information already prevalent in their systems or their markets. They can use this information to develop new business lines and generate viable income streams independent of lawyer activity. Legal information is widespread, can be accessed with relative ease, and doesn’t complain about partnership profits or threaten to join the law firm down the street. 

...the market will reward those firms that adopt these advances and punish those that resist.

De-Lawyering The Law Firm

What we’re witnessing, therefore, is the start of the gradual de-lawyering of law firms. So long as lawyers’ equity is still required to finance the capital and operations of a law firm, lawyers will still constitute a significant percentage of a law firm’s total personnel. But they will constitute a steadily diminishing percentage of the law firm’s revenue-generating assets and competitively significant personnel. Sources of law firm productivity and profitability, at one time a club exclusively open to lawyers, will start to include law librarians, legal knowledge engineers, legal data analysts, and legal productivity engines developed to harness the information the firm has assembled and applied. 

Why would law firms commit themselves to such a radical transformation of their businesses? Simply put, because the market will reward those firms that adopt these advances and punish those that resist. The firms that adopt and develop these productivity engines will be able to sell their services at a lower price without having to compromise on quality. It’ll be a simple matter of competitive mathematics.

*

 

[For more information about Law Is A Buyer’s Market: Building a Client-First Law Firm or to order a copy, please visit law21.ca/books.]

 
 

comments powered by Disqus

Written by:

JD Supra Perspectives
Contact
more
less

JD Supra Perspectives on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.