Five Forces

While Richard Susskind's book "The End of Lawyers?" is always a hot topic when discussing trends in the business of law, Mark Gerow makes a compelling argument in Law Technology News that the market forces Susskind describes were first outlined by Michael Porter's "Five Forces" back in 1979.

"Five Forces" detailed the following market forces that impact any industry (not specifically law) as:


Within this context, Gerow highlights how these forces are effecting the current state of the business of law.

• "Clients have more bargaining power due to increased options for sourcing legal services (both geographically and in terms of method of delivery.)"

• "The threat of new entrants has increased in certain segments due to globalization."

• "The threat of substitute products (such as outsourced e-discovery) has increased."

• "Rivalry within the industry is high due to the barriers of exit (a law firm can't choose to switch to healthcare services if the legal market becomes too crowded, it must "stand and fight".)"

It's interesting to view the legal industry through this broader lens, crystallizing the impact the internet has had in increasing competitive pressures on a legal industry that had been largely insulated from theses dynamics in the past.

The Vanishing American Lawyer?

The Vanishing American Lawyer is an interesting new book weighing in on the future of the profession.

Authored by George Washington University Law Professor Thomas Morgan, the book discusses -- amongst many topics -- two items that have been frequent fodder in this blog: The the lag time that American law firms are exhibiting in adapting to the changing global legal climate, as well as the irresponsibly slow reaction from law schools to the changing nature of the profession.

Am Law Daily reviewed the book, and said:

Morgan doesn't think that lawyers or legal needs are about to disappear. Rather, he argues, thanks to a combination of technology, global competition, and client demands, today's fairly comfortable landscape will be transformed.

"What this book predicts," he writes, "is that the interaction of law with increasingly complex economic and social issues will make distinctively legal questions less common and make many of the skills now honed in law schools less relevant."

In his view, highly specialized lawyers—often working out of large globe-straddling firms—will serve their clients as one of many agents addressing a problem. Some of the work now done by lawyers will be done by others, and vice versa.

"For better or worse," he writes, "most of tomorrow's lawyers will resemble what we today call business consultants more than they will call to mind Clarence Darrow or Atticus Finch."

The Vanishing American Lawyer seems to be consistent with Richard Suskind's The End of Lawyers? in their shared conclusions that the future of the profession is facing profound changes brought on by technology, the commoditization of legal services, external investment, and legal outsourcing.

Unbound

Unbound: How Entrepreneurship is Dramatically Transforming Legal Services Today is a timely and relevant new book for anyone tracking emerging trends in the legal profession.

Wasting no time, the opening paragraph dives right in with observations we've been discussing for the better part of this year:

"The financial and economic crisis of 2008 delivered the final blow to any skeptics still resisting change in the legal industry. The legal industry is now rushing toward dramatic transformation. Change is long overdue... Over the next three to five years, the legal landscape will be dramatically reshaped. Law will continue on its global march. Even small firms are outsourcing legal support work overseas."

Author David Galbenski founded Lumen Legal, a legal staffing and consulting company, in 1993. His fifteen years as a legal consultant has informed his identification of a number of major trends that he believes will affect the legal industry in the coming few years. Some of those trends are:

• New ways to buy legal services. Consumer demands will force the legal industry to behave less like a profession and more like a business.

• New ways to provide legal services. Globalization is a force that will expand the ways in which legal services are provided to the end consumer.

• New ways to organize legal services. Tasks will become unbundled, as a result of both business pressures and globalization.

• New categories and types of people will be called upon to perform legal services.

Unbound underscores many of the opinions in Richard Susskind's The End of Lawyers? Rethinking the Nature of Legal Services.

Additional quotes from the Financial Times' review of Unbound:

"The highlight of the book is a series of interviews with leading general counsel, who explain the changing global landscape their companies operate in and the pressures in-house lawyers face to rein in costs since the economic collapse. Their observations are stark and should raise the hairs on the arm of every managing partner, group practice leader and legal marketing expert in the business."

"The legal industry is facing unprecedented change, and law firms that don't modify the way they run their businesses face extinction."

"Law firms may be coping with a downturn in business by trimming their costs, but the recession is moving the entire industry toward a range of new, entrepreneurial models that will eventually put the legal industry more in line with other types of businesses."

Legal Information vs. Legal Advice

The unbundling of traditional legal offerings -- which is an emerging trend central to Richard Susskind's recent book The End of Lawyers -- has been a hot topic in these parts lately.

The idea of different legal services becoming available in new venues and formats is one that we're seeing manifest itself in a number of ways from web-based companies offering legal forms, legal facts, entreprenuerial start-up guidance, copyright filing, and more.

And it's happening in both the U.S. and the U.K.

In fact, the U.K.'s Legal Services Act 2007 is a national initiative providing a legislative framework to actually reform the way legal services in England and Wales are regulated and delivered.

The Act specifically allows legal services "to be provided under new business structures" with a stated goal of promoting "competition and innovation".

The BBC recently reported on this, highlighting that "future providers, including large retail brands, could seek a license to offer legal services."

The article includes opposing views, including an attorney who says the move "demonstrates utter contempt for the consumer of legal services. The solicitor profession faces being all but wiped out by a government seemingly intent on robbing the public of access to good quality, local legal advice."

Ah, but here is something to keep in mind: As we talk about the fragmenting of legal offerings, it's important to be consistent in distinguishing between legal information and legal advice.

In fact, it could be argued that the BBC's reporting fails to do this. Or, at the least, it allows for the interchanging of the terms.

The American Bar Association distinguishes between legal information and legal advice. Legal information is general, non case specific, and can be provided by anyone. Legal advice, on the other hand, is "provided by a trained lawyer who uses his or her knowledge of the law to tell you how the law applies to your specific circumstances."

When listening to all the voices on both sides of the conversation, it's important to keep the distinction in mind and remember that legal advice isn't going anywhere.

Legal experience, insight, and strategy aimed at an outcome will always be in demand. What is evolving, and will continue to evolve, is how the more rudimentary and "commoditizable" aspects of the law will be unbundled and delivered.

More Commoditization -- Putting A Price On Experience

Still ruminating on our recent post regarding the commoditization of some legal services.

The commoditization is coming hand in hand with the unbundling of legal services. Some legal tasks, which historically have been conducted en masse in one office, are being fragmented and driven down the workflow pyramid to their most cost efficient layer -- even if that layer is in another zip code.

This natural process (aligning the work with the most cost-efficient execution of the work), which has always occurred within the confines of a single firm, is slowly taking place across the country and the planet. Essentially, the walls of the single firm are coming down. And, with the removal of some office walls, the consumer, end-user, and attorneys themselves have increased access to legal process efficiencies.

To put it another way, the unbundling of legal work is a natural byproduct of increased access.

As for the increased access, well, there's that darned internet again. Okay, it is both obvious and a monumental understatement to say that the internet has and is changing the landscape of many professions (ask any travel agent if his/her job evovled in the mid 1990's). But there is no denying that, in terms of evolution, we are knee deep in primordial soup watching a surge of business models bubble to the top, each with the goal of leveraging the end-user's increased access to legal efficiencies.

One of these new strands of business models that is especially noteworthy is unbundling and commoditizing not just legal tasks, but another entity entirely -- legal experience.

Tologix offers software to attorney's who conduct research in specialty areas of law. A firm's (or even a single attorney's) years of work can be collected, captured, and organized so that the aggregate can be searched and monetized on a subscription basis to end-users.

Websites like justanswer.com allow consumers to name their price and receive one-off legal information directly from a network of experienced attorneys online.

Both are prime examples of the wave of creative business models surging right now to leverage the unbundling of legal offerings resulting from increased accessibility via the internet.

Again, it's way too early to say which models will thrive and which will flame out in short order. But it sure is fascinating to watch.

The Commoditization of Legal Services

Every now and then an idea or meme seems to catch fire and become ubiquitous in a very short time. In the past couple weeks, discussions and examples of the growing commoditization of legal services has come from a number of fronts.

Marketing pushes from consumer-targeted, off-the-shelf legal forms companies like LegalZoom, LawDepot, and USLegalForms are examples of legal products replacing services. Similarly, companies targeting the small business market, like Direct Incorporation and Business in a Box, are attempting to carve out their own niches.

One interesting element of the trend is the actual language being used to describe it. Language that Robert J. Ambrogi nails in a recent post at Legal Blog Watch.

"Legal services are evolving from a highly bespoke, highly customized product toward becoming a commodity. As part of this evolution, legal work will be unbundled into its constituent tasks and many of those tasks will be standardized and systematized."

From the perspective of an LPO (which provides actual services, rather than off-the-shelf products), the key word in that passage is "unbundled". Because the value in legal process outsourcing is identifying which legal tasks can be efficiently unbundled and outsourced for significantly lower costs.

This idea of unbundling is also prominent in Richard Suskinds new book, "The End of Lawyers? Rethinking the Nature of Legal Services". This description from Oxford University Press cuts right to the chase:

"It is argued 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, directly or indirectly, by smart systems and processes. It follows, the book claims, that the jobs of many traditional lawyers will be substantially eroded and often eliminated. This is where the legal profession will be taken, it is argued, by two forces: by a market pull towards commoditisation and by pervasive development and uptake of information technology. At the same time, the book foresees new law jobs emerging which may be highly rewarding, even if very different from those of today. "

For another of the many voices discussing the commoditization of legal work, the Chicago Lawyer has an excellent overview.