My post on "Law Firms Are Fat, Not Flat" has drawn the ire of one commentator Moe Levine, who has also taken issue with numerous other posts on this site here and here. Recall my "Fat Law Firm" post essentially noted that law firms have largely remained insulated from change and innovation, and are way behind other industries in terms of delivering added value to clients. In response to my post, Moe states:
You write, "Law firms are insulated from the pressures of innovation because of liscensing restrictions."
What do you do, just sit around and make up silly stuff?
American law is probably the most competitive business in the world. There are zero barriers to entry, save for education and a 2 or 3 day test, once. There are no capital requirements, etc. etc.
Competition does not spur investment. The opportunity to earn a return on an investment yields investment. There are no opportunities in the law to make more money.
There are no deals not being done because of legal cost, no real property not being sold, no crimes not being committed, or probate estates not being closed.
Legal services are sold as they are because the market is working.
Moe obviously thinks that the legal services market is, in fact, both innovative and market driven. I disagree with most of the points made by Moe, above. I have worked for several of the largest law firms in the United States, as well as some smaller ones. I see what is happening on the ground every day. I Observe an insular and uninspired profession which is so self-regulated and self-absorbed, that relative little is being done to incorporate new technologies and business models to deliver more value for less cost to the client (although I certainly see plenty of firms using technology to find new ways to create billing events for clients). When you look at what is going on in other markets with outsourcing, insourcing and order fullfilment, law firms with few exceptions are still sitting on the beach waiting for the swells to come up. Without doubt, Wal-Mart is the king of delivering more for less regardless of what you think of the politics of Wal-Mart's approach. Is there any firm which is even remotely analgous to Wal-Mart in terms of reducing cost and increasing value?
I wanted to take the opportunity to respond to one of Moe's comments which I find interesting. Moe says "e; there are no deals not being done because of legal cost." Actually, I see something worse every day. Yes, the criminal commits the crime, but the real question is can they afford an attorney. And even the wealthy accused have the right to get more for their legal buck. On the civil side, I see attorneys still charging thousands of dollars for contract review and drafting because they are using a process which drives hours up, ignores all of the great efficiencies offered by technology and software and are using billing techniques which offer no incentives for the lawyer to deliver maximum value for the least cost. I see that the average small and medium-sized business avoid lawyers like the plaque when they do deals because they don't see value being delivered by those lawyers. I deal with litigators every day who have no idea what they are trying to achieve for the client in court and are driven only by a sense that they need to fight without any sense of what they are really fighting for. These trial attorneys go into a comma 30 minutes after the hourly retainer is signed and become barriers to resolution until after their client runs out of attorney fee money.
The very concept that an hourly billing model where the attorney has absolutely no 'skin in the game' could actually drive a market to efficiency (as opposed to maximizing revenue) is puzzling to me. But many lawyers are so blinded by the way things are that they don't see how bad things have gotten. And any attack on the hourly billing model is akin to treason against the profession. A thoughtful rational analysis yields one conclusion. The legal services business is ripe for reform and innovation. Market alternatives are the next step. In order for market alternatives to become readily available we need the market to open up and alternatives to become more accessible to clients, Someone needs to turn the light on. Without more traditional marketing and sales, how could that ever happen?
And yes, Moe, I do sit around sometimes and make silly stuff up, but that material I share with my kids. Knock Knock. Who's there? ... Hourly ... Hourly Who? Hourly Gonna Accept The Future?