Editor’s note: Guest blogger Andrew McLennan-Murray is an applications integrator for Thomson Reuters, Legal.
Economic factors and evolving client culture have forced law firms to adapt their business strategies. At the ILTA 2010 session “A New View of the Automated Law Firm,” several experts gave their opinions on emerging law firm business models and the importance of process and technological automation to firms.
The panel consisted of Gerard Neiditsch, executive director of Business Integration and Technology from Mallesons Stephen Jaques; Jeffrey Rovner, managing director for Information for O’Melveny Myers LLP; Mary Abraham, counsel at Debevoise & Plimpton LLP; and Ron Friedmann, SVP in Consulting for Integreon.
Jeff Rovner referenced Richard Susskind’s The Evolution of Legal Service in a foreword, explaining how the business of law firms is changing drastically right now. Some firms, he said, would become the “Wal-Marts” of law, commoditizing their legal services and automating the legal workflow to peak efficiency; often competing on the basis of price. Other firms, he said, will become the “Neiman Marcus” of the law firm world, providing premium services and hiring only the most highly rated attorneys.
Gerard Neiditsch introduced the concept of the Law Firm “Stack” of the Future, explaining process categories firms will have to focus on for driving their business in the future. Key concepts included firm strategy discussion on “How Work is Produced,” “Who Does the Work,” and “How Work is Packaged.”
Carrying on the Wal-Mart and Neiman Marcus analogy, Friedmann went into specifics around how the “Factory” law firm of the future will approach creation of work product, and contrasted how a higher end service oriented firm might approach it. Friedmann took the example of document drafting and contrasted how commoditized “factory” firms might approach the task with how high-end firms would.
Document Drafting:
Drafting from Scratch – Very reduced in the “factory” law firm.
Drafting from External & Internal Samples – A strategy the high-end firm might utilize.
Drafting from Standardized Document – The bread and butter of the “factory.”
Drafting by Expert Systems – Highly utilized by the “law factory” firms.
Implementation technologies would vary between the two types of theoretical firms. For example, document assembly would be a critical tool for the law factory, whereas a tool to search external precedents would be more relevant for a high-end firm. Work product retrieval and DMS tools would remain important to both types of firm.
Critical to the success of the future law firm will be a continual focus on how work is managed. Budgets, project management, standard process documentation, experience location, formal lawyer training, enforcement of process, and strong client feedback loop will all need to be put under the microscope. The “law factory” will have to refine its project management, budget, and process methodology to be able to compete on price.
Firms will have to focus on how business is developed to stay relevant in the marketplace. Traditional methods of drumming up business like referral may continue to work well for the high-end firm, but the factory may need to take a different approach. For example, value of services per dollar spent will be a key driver for the factory firm’s business.
Firms may also have to change pricing strategies. The law factory will survive on fixed fee arrangements, retainer and subscriptions and contingency pricing whereas the high-end firms may still be able to stay with hourly rated or hourly capped pricing. Profits in the high-end firms will largely come from premium pricing and acceptance of high-risk matters. Factories will have to drive down their own costs through technology and high leverage practices to bolster their efficiency and throughput.
Overall the session gave a highly interesting hypothetical view into the future of law firm business. There was much debate during the Q&A period of the session.
The topic of the future landscape of the practice of law is sure to be hotly debated over the next few years, but only time will tell which predictions will come true and which will go the way of the flying car.
Andrew McLennan-Murray
Applications Integrator
Thomson Reuters, Legal
Posted by Andrew McLennan-Murray in:
In Business | Industry trends |
Great post. Thanks.
However, we must consider that speculating about the future of law firms using industrial era organizational structures, like present day retailers, may be a mistake.
Whilst no doubt some will move in this direction, this future analysis excludes new forms of organizing lawyers similar to open, horizontal networks and vast global communities. What will they create?
Jorge
Founder of The Online Bar
http://obacard.me/jorge
[...] Legal Current blog posted about an ILTA session entitled “A New View of the Automated Law Firm.” The session [...]
Hi Jorge,
Thanks for the comment. To your point: it’s certainly difficult to speculate on what the future will bring, but I believe it’s also worthwhile. Whatever the actual future holds, this type of exercise might inspire the thought leaders you reference. Could thinking of law practice in terms of the brick & mortar juggernauts of yesteryear be used as a useful tool for thought construction? I believe so. Do we also have a bright young generation of lawyers who were born in the back of an 18-wheeler barreling down the information superhighway? Yes. I have no doubts there are surprises in store for us for the future of the practice of law. Ultimately I believe clients will be (indirectly) responsible for the shape of organizational structures to come. Those law firms able to adapt to client needs will thrive. As always, I look forward to hearing more innovative ideas on the future landscape of legal practice.
Thank you,
Andrew McLennan-Murray
[...] Ron Friedmann, Gerard Neiditsch and Jeffrey Rovner presented a compelling case for analyzing more carefully the business of law as practiced by most firms. Their session provided a practical way to take some of the provocative ideas presented by Richard Susskind at ILTA 2009 and make them a reality. The key take away: different business models may require different technology and business processes, and a mismatch can lead to great inefficiencies. Do you understand the business drivers at your firm? (For more information on this session, see the presentation slides and a summary by Andrew McLennan-Murray.) [...]
[...] A New View of the Automated Law Firm Guest blogger Andrew McLennan-Murray succinctly describes this 2010 ILTA presentation by Gerard Neiditsch, Jeffrey Rovner, Mary Abraham, and Ron Friedmann (PDF download) of the same name over at Legal Current. [...]
Ignyte is a branding firm that works exclusively with small and middle market firms.
I am wondering why you did not comment on the middle of the sector, the specialized boutique firms that are becoming a tremendous force in shaping the future of the industry and arguably, the single biggest competitive factor when it comes to what you refer to as the Neiman Marcus of law firms. You’ve missed the most important segment in the industry transition from the19th century model to the 21st century model.
Andrew great post. I think the analogy of the factory and boutique law firms worked pretty well. (I was at ILTA also). The analogy really works because not only is the structure of the law firm going changing but so is the role of the attorney. I think Richard Susskind does a pretty good job in his book of highlighting the 5 different categories of attorneys that will emerge. I work for a document assembly vendor, arguably the leader and I am very keen on the “legal knowledge engineer” in fact I would consider some of our support specialists that work at Business Integrity to be just that.
One final comment. I think that all types of firms will be using document assembly in the future, the reason being that even the boutique firms can benefit from automating the routine or non-bespoke parts of their service.