You may have read the title of this post and thought, “Yeah, right.” But hear me out. The legal industry is poised to make a massive, technology-driven transition over the next decade. The problem right now is, all the purveyors of software and technology within the legal industry are inhibited from providing legal services themselves. But eventually, one of two things will happen: 1) the rules will change, or 2) law firms will become more innovative. Either way, I’m a believer that law firms will become software companies in the future, and here’s why.
Software Is Eating the World
To quote prominent technology entrepreneur and venture capitalist Marc Andreesen, “software is eating the world.” He makes a strong argument, backed by evidence, that software companies are gradually taking over, swallowing up the global economy one chunk at a time.
Some industries have already been completely disrupted. Look at what Netflix and Spotify did to the movie and music industries (remember Blockbuster and Borders?). Look at what Uber did to the taxi industry, or what’s happening to financial advising as a result of Wealthfront and Betterment.
Change is underway in just about every other industry as well, with the greatest laggards being health care, education, government, and legal. But given enough time, I’m convinced that all of these industries will be transformed, streamlined, and ultimately improved, through software.
The Building Blocks Are in Place
Technology has evolved to the point where many of the costs and challenges involved with starting a software company have been drastically reduced or eliminated altogether.
There are back end solutions for setting up databases and server architecture. There are powerful programming frameworks to help with writing code. And above all, with the prominence of smartphones, more and more people are actively using technology in their daily lives.
All the pieces are in place to make software development a feasible endeavor for almost any type of business, including a law firm. It might sound crazy right now, but don’t you think the Blockbuster execs were kicking themselves for not getting into the software business as they filed for bankruptcy?
Market Demand Is There
It’s certainly no secret that market demands are changing in the legal industry. Consumers are turning more and more toward low cost, alternative legal services provided online by companies like LegalZoom and Rocket Lawyer. Businesses are utilizing services like Axiom and UpCounsel to reduce their legal spend.
This situation puts a lot of downward price pressure on law firms, and diminishes the value of legal services. Traditional legal services aren’t cutting it. The market is screaming for something different, something that’s more affordable, accessible, and predictable.
As the story always goes, software is the answer. But, the problem is, software companies are not in a position to deliver what the market desires. Software companies cannot provide legal services, and law firms generally don’t build software.
The market’s desires won’t be satisfied until either the rule against non-lawyer ownership of a law firm changes, or law firms build software themselves. And regardless of which outcome happens first, the end result is inevitably that law firms of the future will be in the software business.
Law Firms Have the Power
Despite all the technology advancements I mentioned above, building good software is still hard because it requires keen insight into the pain point being solved. This is why most great software products arise from the personal struggles or pain points in the lives of the creators.
Facebook was built because Mark Zuckerberg wanted a better way to connect with people on campus at Harvard. Google came about because Larry Page and Sergey Brin wanted to build a better algorithm for searching the internet. Salesforce exists because Mark Benioff hated the clunky, outdated CRM solutions being used in B2B sales companies.
This notion brings me back to my previous point, which is that software companies are not the ones in the best position to build software-based legal solutions.
Law firms are the ones with an insider perspective about their clients’ needs. They’re the ones with the expertise and legal knowledge to deliver a solution. It’s the law firms that truly hold the power.
So as the evolution of the legal industry moves on, I fully expect that the law firm of the future will be a software company. The only question is whether today’s law firms are going to adapt and start building software themselves, or whether the rules will change and open up opportunities for software companies to steal away even more market share.
Whatever your thoughts on the matter may be, just keep in mind the troubled fates of Blockbuster, Borders, taxi companies, and record labels. Because they waited too long to make an entry into the software space, they either went belly up or are now confronting their demise as a real possibility. Let’s hope your law firm isn’t next on the list.