Pearl Harbour for law firms

As first appeared in Legal Tech Fest Blog

Surprise attack, not expected, provoked action, changed forever – some of the terms associated with the attack at Pearl Harbour on the 8th December 1941. Similar to the businesses, services and technology coming at the law firm traditional business, with one difference – America did not know they were going to be attacked. 

Law firms have warning signs everywhere – red flags or you could say waving a red cape to a bull (A load of bull, as bulls are colour-blind, but it seems to aggravate them plenty) – you could say everyone is looking to get in on the business that was once reserved/protected or owned by lawyers.

Why is it that everyone is attacking?

The answer is rather simple. 

Perceived High Profits – Previously in the good old days law firms charged freely (Sometimes high fees) without question from the clients – business outside of law firms saw the high charges and concluded that this service if possible outside law firms, would be a viable business and all they need to do to compete is offer the same service at a lower rate.

Automation – The business world looked up and took notice of automation, especially things like document automation and embraced it wherever they could in their business, but law firms seemed to ignore the technology. While the law firms have been slow to adopt automation, other business are light-years ahead and understand the benefits far better. Also, law firms may have seen the efficiency of document automation, but to do this efficiency, they would have to drop their fees.

Unbundling of reserved work – specialization, people contracting in, outsourcing services have all contributed in dividing the reserved legal work from the rest – this makes it easier to target non-reserved services.

High overheads – law firms are not cheap to run. Put a startup business head to head on the same services and their profitability will be huge in comparison.

Hourly Rate – Slower, thorough, meticulous is the ticket to more fees, automation offers accurate, faster and easier solutions. One can see why there would be resistance to change.

Considering the above, the door of opportunity has fallen off the hinges, never to be closed again.

Are the Japanese bombers the ALS (Alternative Legal Services)?

Well, yes and no!

The ALS businesses have taken what law firms do, and put the processes into a production line, added volume and due to repetitiveness mostly, have mastered many of the skills. Yes, they are a threat, as they can offer these services to law firm and other business. 

Are they the only threat? Absolutely not.

Tech companies’ eyes turn green with envy, when they see the size of profits being made by law firms. Their business is based on finding efficient technology solutions for slow, meticulous processes that can be marketed easily to the consumer. They could have been providing technology to law firms and over the years have decided to start offering solutions directly to the consumer. Sort of, “If the lawyers don’t want it, offer it to the pubic!”

The most accurate bomber in my opinion is the youngster who has either done their articles, or has worked in the law firm, knows the process, sees the opportunity and starts plotting their product or service. These youngsters invariably know a software developer or two and with an extremely small group of people design, implement and provides the consumer with an efficient and cheaper solution.

What makes these youngsters such a threat?

No overheads – these young guns don’t have children, bonds, school fees, office expenses, staff – heck, most of them live with their parents and don’t contribute to the house-hold expenses either.

No pressure – no overheads, no deadline, no staff.

Energy – they are young, fresh to the game, excited – full of energy to get the product to market. This motivates them to work extremely hard, much harder than a salaried staff developing a solution for a law firm or even a business for that matter.

If financial backing is needed, the big tech companies are very keen to adopt these startups, as the perceived return is large as mentioned above.

No risk – the above reasons make it clear that there is no risk, if they fail, they find the next opportunity and give it another shot – most probably in the same legal space, as this is what they know – the only thing that would stop them, would be running out of energy.

What to do as a law firm?

Listen…

To the youngsters’ ideas inside your firm.

To your clients and what they really want from you.

To technology and what it can do for you.

If America was listening, they may have saved the lives of thousands of servicemen.

Malcolm Pearson
www.Tech4Law.co.za

@Tech4Law
#Tech4Law
malcolmp@tech4law.co.za

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