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February 04, 2009

The End of Lawyers?

Note:  My series on alternative fees will resume next week.  This week’s post is about a book that’s too important to wait.

End of lawyersThe title of Richard Susskind’s new book is apocalyptic - The End of Lawyers?  Rethinking the Nature of Legal Services.  The book jacket describes it as “the long awaited sequel to [his] legal best-seller of 1996, The Future of Law.”  In this important new book, Susskind - an Emeritus Professor of Law at London’s Gresham College - predicts (p. 269) that “lawyers who are unwilling to change their working practices and extend their range of services will, in the coming decade, struggle to survive.”

His basic argument is that the legal profession is changing rapidly as a result of advances in information technology and pressures toward commoditization.  One result (p. 2) is that “The market is increasingly unlikely to tolerate expensive lawyers for tasks (guiding, advising, drafting, researching, problem-solving, and more) that can equally or better be discharged by less expert people, supported by sophisticated systems and processes.”

The book digs deep into details and specific examples, especially regarding IT.  For example, in a section on automated document assembly, Susskind talks about Allen & Overy’s newchange documents system to create and amend certain types of loan agreements more quickly, Linklaters’ Term Sheet Generator, and more.  You may note that most of his examples throughout the book are from the UK, but that only seems fair, since that’s where Susskind is based.  The trends he describes are global.

I have no idea which of Susskind’s specific predictions will prove to be true, and which will be false.  From my perspective, the details are less important than the big picture (p. 270):  “for many lawyers, it looks as if the party may soon be over.”

If you don’t agree that the legal profession is changing rapidly, you might want to talk to lawyers and staff who used to work at Heller Ehrman, Thelen or Thacher Profit, three AmLaw 200 firms that have been dissolved in the last few months.  Or see Hildebrandt’s report on “The Anatomy of Law Firm Failures” to review the facts for other large firms that have dissolved in the last few years, including Altheimer & Gray, Arter & Hadden, Bogle & Gates, Brobeck Phleger & Harrison, Butler & Binion, Coudert Brothers, Donovan Leisure Newtown & Irvine, Hill & Barlow, Jenkins & Gilchrist, Johnson & Wortley, Keck, Mahin & Cate, Lyon & Lyon, Pennie & Edmonds, Shea & Gould, Testa Hurwitz, and Troop Steuber Pasich.

Looking in my own personal crystal ball, I predict that changes in the legal profession will be much faster than most lawyers expect, but slower than Susskind predicts.  I believe he underestimates the power of inertia, lawyers’ ability to resist change, and clients’ need for the human touch.

But if I ran a law firm, I wouldn’t bet on change being slow.  Hildebrandt’s 2009 client advisory came out two days ago predicting that “the current economic downturn in the legal market is likely to be deeper and longer than any we have seen in the last two decades (p. 19).”  This important report discusses many significant implications (p. 11), and argues that “law firms face a fundamental change to their basic economic model.”

As Bruce MacEwen summed it up when he reviewed this book in Adam Smith Esq.:  “We are, to state the obvious, in the midst of once-in-a-career challenges to the familiar business models, where yesterday's conventional wisdom may not suffice for tomorrow.”

Which leads to the most critical question:  what are you going to do about it?  Susskind’s final chapter includes many suggestions.  The one that caught my eye was that in the future (p. 283) “much legal work will either be outsourced or automated, and that which remains will be distinguishable on grounds of packaging and presentation more than on expertise.”  Or, to put it another way:  To prosper in the future, lawyers will need more marketing.

I can’t say that I am proud to live in a world where packaging and presentation matter more than substance, but nobody ever asked me what kind of world I wanted to live in.  In the 24 years I’ve owned a training company, I’ve learned the hard way that sales and marketing are the key to success.  It looks like lawyers are starting to learn this too.

The Legal Marketing Association did not exist until 1985, but it now has over 3,100 members.  Many lawyers seem to feel that they are spending too much on marketing, but you should see what people spend in other businesses.

According to the latest data from the BTI Consulting Group, large law firms currently spend about 2% of their revenues on marketing.  A few years ago, I posted a blog comparing this to the 6% to 8% of revenue that accountants, architects and other service professionals spend.  Not to mention figures that go as high as 33% in other types of business.

The 2009 Hildebrandt client advisory says (p. 18) that to deal with the economic crisis “a good place to start for many firms would be to provide serious business development and leadership training for department heads and practice group leaders, as well as for promising younger partners.”

But enough about the products we offer.  Back to the book.  Should you buy it?  I would say absolutely yes if you need to be convinced that change is coming, or you want to know more about trends in such areas as online legal guidance, legal open-sourcing, courtroom technology, and online dispute resolution.   But if you’re already convinced that change is coming, and just want to focus on how to react, I’d put the time and money into reading about legal marketing.  For twenty books that could help you get started, see my list of the “Top marketing and sales books for lawyers” on Amazon.

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Comments

As a document assembly vendor, I have a strong self-interest in the legal industry changing as quickly as Susskind predicts. However, I agree with your comments about "the power of inertia, lawyers’ ability to resist change, and clients’ need for the human touch." (Which is also why I suspect that the billable hour still has a long life ahead of it.)

That said, I do think that companies (or at least the large ones) are taking more control over how their routine legal work is produced, typically by using internal lawyers to undertake the work.

It would be interesting to find out how successful the Linklaters and A&O client self-service document assembly offerings have been. Would clients ultimately prefer to pay law firms to provide their routine documents in a more streamlined, self-service manner? Or do they feel that there is advantage in owning that process themselves and producing those documents internally?

I've read other posts such as yours as well as many focused on the disadvantages of billing hourly which carried a similar message. All these predictions seem directed to lawyers who practice in large firms with businesses as clients. I am a solo practioner who serves individual consumers. I agree that my practice has changed and many who would have used my services a few years ago instead go to the Internet. Some of those who used the Internet to get legal services later come to me to sort out the unintended consequences that befell them because "guiding, advising, drafting, and problem-solving" are exactly what they needed in the first place, not document assembly. (Tyically they don't need research).

Do you or Susskind or Hildebrandt or any of the legal gurus out there include solo practitioners who serve consumers in your predictions?

Carol - Thanks. You got me thinking. See the next post on "Future trends for solo practitioners."- Jim

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