New Math, New Money
Three Ways to Compete in the Coming Legal Market
Jordan Furlong’s book Evolutionary Road describes a hair-raising future for the practice of law. While the basics remain the same — solving problems and resolving conflict for clients — the methods and means vary radically. What does your future look like? In the following excerpt from our latest webzine, “New Math, New Money: A Lawyer’s Guide to the Changing Business of Law,” Jordan says there are three primary ways lawyers will make money in the coming legal marketplace.
Few things will jolt lawyers into action faster than an incursion into the legal services market by someone who is not a lawyer. Claws out, fangs bared, hair raised on end, the profession aggressively protects its territory the way it knows best: by initiating a proceeding under the appropriate jurisdiction’s unauthorized practice of law regulatory framework.
This tactic has proven remarkably successful for decades in maintaining lawyers’ de facto monopoly on most legal services. And it has, to be fair, gone some way toward protecting members of the public from incompetent or unscrupulous vendors of legal products. But it has also, undeniably, choked off competition, narrowed consumer choice and stultified the growth of innovative services.
Regulation as a Means to Prevent Competition has Run its Course
Regardless of whether this strategy has been good, bad or indifferent, it is becoming increasingly clear that it has run its course. The U.S. legal market now includes online legal-form vendors, overseas lawyers and advanced software tools; the Canadian market includes licensed independent paralegals; and the U.K. market includes everything from banks, accounting firms and legal publishers to logistics companies to a law firm traded on the stock market.
These incursions will continue. Lawyers need to understand that, eventually, virtually everyone will compete with us, for almost everything that we currently do.
Only a few specialized aspects of lawyers’ traditional inventory — trial advocacy foremost among them — will withstand attempts by new competitors to gain a piece of the action. The portion of what lawyers do that absolutely, positively, nobody else can do is thin and shrinking. So we have three choices: Own that thin portion, compete hard for the wide-access work, or create brand-new markets.
1. Own the Exclusives
Lawyers and law firms that pursue this channel will become extreme specialists, niche players brought in to provide a specific service of great importance at the highest standards of quality. Formidable trial attorneys, masterful legal negotiators, topflight regulatory analysts and peerless managers of complex corporate arrangements will find these fields populated only by lawyers.
The remuneration for these kinds of jobs will invariably be very high, given the stakes for clients and the skills of the performers. But the competition among lawyers for these last remaining slices of high-value, lawyer-exclusive work will be unbelievably intense, in part because the volume of this work will be relatively light. “Bet-the-company” work is scarce because companies don’t tend to bet themselves every day. The winners of this competition will enjoy extraordinary careers. But be warned: There will be many more losers than winners because there is just not that much room on the top of the mountain.
2. Compete for Wide-Access Work
Demand for all other legal services will continue to grow in the years to come, as it always has. But non-lawyer providers of those services will also increase, nd they will take advantage of lower operating costs, more efficient systems, fewer ethical restraints and more sources of capital than lawyers have. Lawyers who wish to remain in this part of the market will have to adapt their approaches and business models to be competitive.
This will be a two-pronged effort. On one hand, lawyers will have to deploy systems and processes to reduce their own costs of delivering services: interactive will-drafting software, automated contract-assembly programs, outsourced legal analysis and the like. Lawyers will have to adopt the streamlined efficiency of their new rivals, perhaps by co-opting them into their own practices, perhaps by developing competing systems. The twin goals will be to improve overall effectiveness while remaining price-competitive.
At the same time, however, lawyers will invest most of their personal time and effort in up-front, client-facing, hands-on interaction at the highest value points in the relationship. For example, once the client has used a machine to draft a will or contract, the lawyer speaks at length with the client, learns the intricacies of the situation, and adjusts the draft document accordingly. The human contact, the lawyer-client relationship, remains the linchpin of value.
Lawyers will never be the least-expensive option in this sector of the future legal market — nor should they strive to be. Lawyers ought to position themselves as a premium yet still affordable option: You will pay a little more to use a lawyer, but you will receive personal, professional, genuine and high-quality service in return.
3. Create New Markets
This is the most challenging course for lawyers to pursue, but also the one with the most upside. Rather than remaining inside the boundaries of traditional law practice and fighting harder than ever for the available work, this approach involves moving into areas at which lawyers have yet to try their hand, or areas that won’t even exist until lawyers create them by tapping into unmet needs.
In the former category might fall a function such as “corporate strategist,” a kind of business consigliere role that integrates lawyers’ personal judgment, marketplace knowledge, and analytical and logical abilities to provide ongoing strategic planning and risk management. Large accounting, consulting and systems firms have been providing these services up until now, but lawyers arguably have a better mix of skills than any of them to perform these services.
In the latter category might fall new roles such as a “legal physician” who provides families or small businesses with annual low-cost checkups of their members’ legal health; a knowledge designer who creates customized banks of legal know-how for specific clients; or a legal auditor who assesses organizations for legal risk, strategy disconnects, function variances and productivity leakages.
These will be the three primary ways that lawyers will make money in the coming legal market. New competition will oblige us to be exceptionally good at what we’re currently doing, or learn to do what we’re currently doing in a much more cost-effective and client-focused manner, or strike out into new territory and aim to disrupt other markets just as our own is being disrupted.
Which road will you choose?
Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a principal with Edge International, a senior consultant with Stem Legal and a blogger at Law21: Dispatches from a Legal Profession on the Brink. He is the author of two recent books: “Evolutionary Road: A Strategic Guide to Your Law Firm’s Future,” (now available in soft cover) and “Content Marketing and Publishing Strategies For Law Firms.” Follow him on Twitter @jordan_law21.
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