The online juggernaut

I listened in to an interesting webinar last night, organised by Epoq legal, the title of which was ‘Brands won’t kill law firms, customers will’.  Joining Epoq’s representative, Jon Busby, were Michael Scutt and Amanda Bancroft.  Michael’s day job is as a partner at City firm Dale, Langley & Co but he is also a well-known commentator on issues thrown up by the Legal Services Act   (his blog can be found at http://troubleahead.co.uk/feed/) and other issues in the legal services market such as the increasing use of technology.  Amanda Bancroft is a former barrister who now works as a digital strategist creating strategies and tools for the legal and pharma worlds.

The main focus for the webinar (not surprisingly, bearing in mind it was organised by a pioneer of online legal solutions) was the move towards online legal advice.  Much of the discussion centred around the extent to which the legal market was prepared for the inevitable shift towards web-based delivery of legal services, the extent to which this should and might take place, and the drivers for it. 

Amongst various issues discussed, three stood out.  First was Amanda’s contention that there is a very prevalent misconception amongst the legal profession at the moment that online provision of services is necessarily of a lower quality than face-to-face provision.  Amanda argued that there is no reason why lawyers cannot provide quality service using digital formats.  This led into discussion about the mix, or blend, between online services and face-to-face services.  One school of thought is that the online part of the package should be limited to the data capture side of things, whereas the high value, ‘intellectual’ advice should still be given face-to-face. Amanda’s argument was that online provision should not be limited to that level of advice/work, but that as more and more clients are happy to, and indeed expect to, sit in front of a computer screen and access information and advice, the scale of legal services provided in that way should consequently move on and up.  During the webinar the report from Peppermint Technology Limited, published in October and purporting to show what clients really want from their lawyers, was mentioned.  These figures have been bandied round the legal press, but it is worth noting them again – 96% of businesses surveyed wanted to have the option to communicate with their legal adviser online, and 81% of consumers surveyed were in favour of out of hours services. 

The second interesting point related to data capture and mining, and how far behind the curve law firms are on this.  With sites such as comparethemarket.com, and moneysupermarket.com, consumers are becoming more familiar with these kind of activities and view them as necessary and even useful, whilst lawyers still see them as disengaging and offputting.  Consumers have already been educated in this type of activity, and lawyers should try and benefit from this.

The third interesting point related to which way round law firms approach the issue of technology and online advice.  Is the ultimate driver what the client thinks is appropriate, or what the solicitor thinks is appropriate?  Jon Busby made the point that the fundamental principle behind Apple’s success is that they always put the customer at the centre.  We all know of law firms who have spent lots of time and money taking steps that they think the client wants, which are not then taken up by clients as in fact the clients didn't want them in the first place.  A survey done for one firm was mentioned, where the lawyers were asked what they thought was important to their clients, and clients were asked what was in fact important to them.  Pretty much opposing responses were received, with for example the lawyers putting ‘good drafting’ very high up and ‘staying in touch with the client’ very low down, and the clients doing the opposite. 

With all of this comes the important caveat that many lawyers are so busy doing their day-jobs and keeping on top of their work, that they haven’t got the time to consider let alone strategise about these types of issues.  However, it is vital that they do, as the online juggernaut will not be stopped and in order for many firms to survive they need to take up space in this market rather than leaving it exslusively to the technology companies.

The Perfect Storm?

Much as October 6^th has passed with a whimper rather than a bang in terms of ABSs (although at least with Premier Property Lawyers we do have one ABS now in existence), this hasn’t stopped the national press highlighting the changes in the legal market and commenting on them.  From Radio 4 debates to the front of the Business pages of many of the Broadsheets, the liberalisation of the market has been a hot topic.

Coinciding well with all of this has been the Espirito Santo Investment Bank report on the impact on the market.  The headlines make eye-catching reading, from ‘Perfect Storm spells the end for thousands of solicitors’ to a ‘seismic’ upheaval of Britain’s consumer legal market.  Whilst it must be remembered that the Bank is hoping gain a lot of clients and traction in the external investment market (they are currently advising Irwin Mitchell among others on their options for seeking external capital) the report is nevertheless a timely reminder to those in the ‘consumer’ legal market that standing still is not going to be an option.  As well as focusing on the retail end of the market, the report also deals with the top end, arguing that even the large City firms will not be immune from the changes.  Chiming with the greater proportion of commentators in the market, the report predicts that medium-sized City firms will be particularly badly affected. 

Much as the rules now allow for external investment, many firms have found over the last couple of years that the expectations of external investors are pretty high and do not sit comfortably with the sort of returns traditionally generated by law firms.  The report states that business angels would expect annual returns of 60-70%, private equity around 30-35%, and even public companies 12-20%.  It’s clear that for those firms who are serious about attracting external investment, the spotlight will very much be on the ‘business’ of the firm. 

On a final note, this week also sees the launch of yet another franchise, Simplify the Law.  This one appeals to me especially as its key message is the importance of client communication.  Co-founder Jonathan Brewer argues that clear and proactive communication will be the difference between success and failure for law firms. It’s always good to see someone singing from the same hymn sheet as yourself (see my last post…..)

It's personal.....

“We never listen when we are eager to speak” (Francois de La Rochefoucauld); “Many can argue – not many converse” (A. Bronson Alcott); “Communication skills are the lifeblood of a successful life….if you plan on spending any time there” (Doug Firebaugh)

Amidst all the discussion of the ‘Legal Big Bang’ and the implications of both this, and other market pressures, for lawyers, one challenge is constantly referred to; the need for lawyers to set themselves apart. 

Knowledge of the law will be a given for qualified solicitors (as opposed to the large numbers of paralegals and law graduates who may well flood the market to a greater extent in ‘legal roles’).  So although focusing on legal knowledge may set qualified solicitors apart from non-qualified legal workers, it won’t work in the main as a focus for setting themselves apart from other solicitors (though I appreciate that Quality Solicitors might have something to say about this contention).  What about commercial awareness?  Again, I think that this is pretty much a given. Much as lawyers like to talk about this as if it’s a new concept, an understanding of your client’s business has been important since time immemorial.

I think it’s important to go back to basics and this is especially relevant when grappling with issues (as many firms are now) such as where does a solicitor add value.  Ultimately solicitors provide a personal service to their clients. What counts is their ability to interact, communicate and build relationships with their clients.  An ability to communicate well, interact well, and have effective and profitable relationships with clients and potential clients will help to set individual lawyers apart from other lawyers less adept at these skills.  Mastering these softer skills has always been important but will, I am convinced, become even more vital as lawyers attempt to differentiate themselves and strive to be ahead of the pack. 

Another First on the Blocks

Acculaw……….not sure about the name, but what a great idea, especially when the estimated cost for recruiting and training one graduate is £175,000.  Like QualitySolicitors, you may be able to pick a few holes in the concept and the strategy, but you have to applaud Susan Cooper for being a first-mover and taking the bull by the horns.

There is no doubt that many firms wrestle with what is the best and most cost-effective way to go about trainee recruitment and the vagaries of the market make this a moving target.  The benefits that Acculaw aim to provide then, in terms of flexibility and lower cost, are evidently going to appeal to many firms. 

Any extra vehicle through which the overly numerous budding lawyers can ensure qualification and justify the huge expense of their degree and post-graduate studies has to be a positive step for them as well. 

However, I must confess to being surprised at Acculaw’s assertion that they are in advanced discussions with several City law firms and suspect that any involvement from such firms would be fairly one-sided in favour of the firm rather than the trainee.  My experience of these types of law firms (and I trained and qualified at one myself) is that they aim to produce ‘branded’ lawyers at the end of the training process.  By this I mean individuals who are fully steeped in the practices, processes and culture of the firm. Such individuals are also given the benefit of a full in-house training programme during their training contracts, spread over the two-year period.  Surely having trainees ‘dipping in and out’ would hinder this process. My suspicion is that whilst the big firms might look at this type of arrangement as expedient in terms of cost and flexibility (and indeed Tony Angel, former Linklaters senior partner has welcomed the initiative), they would be unlikely to take such a trainee on at qualification. 

Lawyers →→Project Managers?

Picking up on my theme of blank sheets of paper (see previous post) the phrase has been used by Professor Richard Susskind in his afterword to a recent report on General Counsels (GCs).  The context for this reference is the evolution of the relationship between large law firms and GCs with one of the four main strategies that GCs could (and should) be embracing being to start with a blank sheet of paper and undertaking a comprehensive legal needs analysis for the business. 

Of course many of the big in-house teams have been doing this already, as have many of the large legal firms.   I recall a conference two years ago where the head of IT at one of the large City practices discussed the process her firm had recently undertaken of breaking down the value chain and apportioning off work accordingly; apparently the value chain was broken down into ten distinct stages, and the process was pretty searching and difficult.  Professor Susskind refers to this process as “legal process analysis” leading to multi-sourcing, where the legal requirements of an individual matter or a whole business are analysed to determine the most efficient way of sourcing each element of it.  One of the driving factors for this type of process is of course the development in the ways in which ‘legal’ input is provided, from the use of paralegals, offshoring, outsourcing, automation and so on. 

One possible outcome of this type of approach is that lawyers become more like ‘project managers’ and therefore need to develop new skills.  Lawyers could be spending more of their time co-ordinating the legal process as a whole for the client whilst not taking an active part in all the areas of advice.   As with the argument that not all lawyers are good business people, I wonder how lawyers may cope with such a role. 

On the subject of automation, every time I read another press release (or Legal Futures update) on yet another development in the online legal document/automation market, I always think of the Practical Law Company (PLC) and how quiet it seems to be.  Whilst I appreciate that PLC is offering a completely different service (it is a subscription-based service offered to law firms) automated documentation and similar ideas have been available from PLC for a good few years.  When in practice I always had the impression that PLC was taking over the legal world, hence my surprise at its silence now.  With all these new automated document services cropping up, using completely different and competitive pricing structures, I wonder what effect there might be on PLC’s business model.

Fresh start - new entrant or existing player?

One of the things I keep reading about at the moment is the advantage that new entrants to the legal market have in terms of starting from scratch.  The argument goes that existing firms, with their clumsy decision-making structures, established ways of doing things, entrenched office politics, and so on, do not have the vision or agility to take the bold and adventurous decisions necessary to be sufficiently innovative and move their businesses forward in the new competitive market place. 

For someone starting afresh, however, with a blank sheet of paper, it will be much easier to think strategically about what their business will be, and then set up all the necessary elements accordingly.  This includes the business structure, marketing strategy, internal make-up, use of technology, and so on.  By way of example, we all know the difficulties of building up and adding on bits of IT over time – a new business can (finance depending) ensure that it has the required, up to date, technology from the word go, with all the various elements co-ordinating together nicely. 

However, I think an important element to add to this debate is knowledge of the legal world, and most specifically knowledge of what the client wants.  Those who have been practising for a while, especially those who have also been involved in the running of their own practice, will have an important insight into lawyers, the legal market, and how clients interact with lawyers and view them. 

For this reason, talk of ‘blank canvases’ and so on should I think distinguish between those coming into the market for the first time, and existing market participants making a fresh start.  It is the latter category that excites me the most – and the one where I think there is most potential for successful growth in the new legal world.  Lawyers who have entrepreneurial tendencies, who are able to assess the market in a strategic and rational way, but who have the knowledge and contacts/clients that they have built up over their time working in the sector.  Many of these lawyers may well be feeling frustrated in their existing practices (I have certainly met more than my fair share over the last year or so). If they cannot convince their practices to take the new challenges seriously and consider change where necessary, moving on and setting up afresh might be their best option for a successful future in the law.  However, this is obviously something that is easier said than done – starting up a practice takes a certain type of person and no matter how good the business plan, more risk than most lawyers are accustomed to taking. 

There are options emerging in some of the franchise models that we are reading about increasingly in the legal press.  Aside from these, I am fascinated to see how many new, smallish firms are set up by disgruntled associates/junior partners who have a clear idea about the way forward for the future, but a firm unwilling or unable to move in that direction.  All the talk is of the Legal Services Act leading to a loss of 3,000 firms, but it is quite likely that there may be at least some movement in the opposite direction. 

Consumer redress - one port of call?

Remember a few months ago when the talk was of a single regulator for all lawyers in the new legal world?  Charles Plant first mentioned it as a possible outcome at the Legal Futures conference back in April, and a report by Nick Smedley, commissioned by the LSB, stated in June that a single regulator for all legal services is “logical and plausible”. 

At the time this got me thinking about consumer redress, and whether a similarly simple model could be the answer.  Consumer confusion, and gaps in consumer protection, are big themes at the moment.    The LSB is obviously looking at this with its latest discussion paper, and the imminent opening up of the market makes this a key area.  The LeO has just recently warned that the overlap between regulated and unregulated legal services is causing consumer confusion, with online services posing particular difficulties.   

Consumers need and want simplicity.  If they have been provided with a ‘legal’ (in its broadest sense) service, and they are unhappy with such service, they need to know clearly and quickly what body they should be approaching to deal with their concern.  So what about having one body?  Once in contact with this body, their issue would then get farmed off to the appropriate department, depending on whether or not the service carried out constituted a reserved activity or not, and through what type of entity. 

Is this a pipe dream? Certainly at the moment.  Setting aside the immediate problem of how one would define ‘legal services’, and issues such as the extent of self-regulation, the change would entail yet more disruption, with all the cost that brings, to the existing structure and bodies.  However, from the consumers’ point of view, one port of call, with further direction being led by those in the know, would make life a lot simpler.  Might this help in the legal profession’s battle to show that it is open and accountable?