Sweeping changes are underway, and the legal industry will never be the same. Many lawyers prefer not to think about it and just go about their ways. But those same lawyers are at a much higher risk of being out of work within the next decade. It’s time to reinvent the practice of law. And it starts with having a firm understanding of how the market operates, and what clients are demanding from their legal services. Here are 3 major changes reshaping the legal industry today.
Legal services are becoming a commodity. The internet has opened up a wealth of alternative legal services options, driving down prices and making basic legal services more easily accessible to the general public.
With the rise of companies like LegalZoom, RocketLawyer, and DocStoc, and the newcomers like WeVorce, Trademarkia, and Shake, it seems this market for commoditized legal offerings is really only getting started. We are likely to continue seeing a shift toward commoditized legal services in the market, especially for the more “consumer-friendly” services like estate planning, incorporation, basic IP, contracts, and divorce.
As an attorney, it may seem impossible to compete in this space, and chances are, you can’t offer services at those same price levels. But it’s important to take note of this change, nonetheless.
Commoditized legal services are consuming your marketshare, and it’s because they offer many facets demanded by today’s consumers. Primarily, they are affordable, easily accessible, and powered by technology.
Consumers have spoken, and their demands are now clearly in focus. Attorneys can benefit by looking for ways to incorporate those same attributes to their own services, however possible. And keep in mind that you’re in a service industry, so good law firm customer service should always be a high priority.
2. Consolidation and Specialization
Dire times are on the horizon for Big Law, as illustrated in this piece from Forbes. Layoffs are plentiful, business models are in upheaval, and more and more associates are jumping off the partner track and starting their own firms, or joining boutique firms. The days of careless spending and lavish perks are coming to an end, and operational efficiency is now on every law firm partner’s mind.
We are likely to see some major consolidation happening in the world of Big Law. Within the next 5-10 years, it may look more like the accounting industry, with a Big 4 or 5, and then all the other guys. So what does this mean for the overall legal market?
Well, it is a strong indication of changing consumer demands, and it reinforces the commoditization trend discussed above. The old model of billable hours with no incentives for efficiency just won’t cut it anymore. Alternative billing is now the norm. You’ve got to assess the true value of legal services, and provide a solution where everyone wins.
As a result of consolidation, we are also going to see an increasing amount of specialization, where firms narrow their focus into a single niche. That might mean only representing hedge funds, or only representing technology startups, or only doing software patent litigation, etc.
By focusing and becoming an expert in one specific area of law, your firm will reap the benefits of a better reputation, more targeted marketing, and ultimately greater expertise, which will lead to better results for your clients.
Don’t know how to get started? Read this post for more about finding a legal niche.
3. Automation and Technology
The third of the massive changes reshaping the legal industry is highly interrelated with the other two, and that is automation and the proliferation of technology in the practice of law. Technology is no longer a convenience. It is a necessity, and utilizing technology can bring huge benefits to your law practice.
With the pressure building to accommodate clients’ demands for lower prices, law firm efficiency is key. You have to streamline routine tasks, avoid wasted time, and reduce your overhead to ensure sustainable profitability. Automation enables you to do all three, and it will become an increasingly important part of managing a law firm.
Technology is the underlying force behind all of the changes happening in the legal industry today, as with so many other industries. Just look at what Uber is doing to the transportation industry, or how Airbnb is transforming hospitality. It’s inevitable that eventually, the legal industry will fall victim to the power of technology too, and the process seems to be underway.
As an attorney, the time is now to take action and find ways to leverage technology for your benefit. Don’t sit idly on the sideline and get blindsided like the taxi drivers did. Start looking for ways to automate your law practice so you can offer better services, at lower prices, and maintain a competitive edge in the face of a rapidly shifting legal marketplace.
Above all, take note of these changes reshaping the legal industry as they are happening; don’t just bury your head in the sand and only react when it’s already too late. Stay nimble, keep up with technology, and constantly be evolving. It’s your only hope of survival.