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Top Ten Tuesday: The Legal Industry Is About To Be Turned Upside Down

If the cheap availability of technology wasn’t enough, lawyers now face an even more daunting challenge.  With the economy taking a drastic downturn, the “status quo” is about to be challenged in ways which would have never occurred under any other set of circumstances.  Many law firms, and especially the largest law firms, are suffering along with their mega-sized clients as a result of cash flow problems.  Until last year, representing the biggest companies in the world was seen as a major feather in your cap.  Today, those mega clients cannot pay their bills, many of them sizable.  Big law firms are imploding all over the United States.  Cutbacks, lay offs and firings have become the norm. 

  1. As long-standing attorney-client relationships between large companies and large law firms come under stress as a result of the economic crisis, there is going to be turnover on both the client and law firms.  This means new players who will not share the same allegiances that existed previously.
  2. Clients of all sizes will sense the financial stress their law firms are under and wonder whether or not they are being billed for “make work.”  This will cause clients to start looking at other options in the legal market.
  3. Virtually every law firm now has a website.  Many lawyers share their expertise online.  It has never been so simple to find an A+ lawyer for a specific legal problem using Google Search.
  4. The rationale for using a single mega law firm for all your legal problems in a “one stop shopping” approach simply do not hold up anymore.  Clients will start to realize that simply finding the best firm or lawyer for the job is a better alternative.
  5. Clients are beginning to realize that there are different billing approaches out there being used by various law firms.  You should expect clients to continue to seek alternative billing arrangements as they make decisions about who will represent them on a particular matter.
  6. Big law firms cannot compete across a range of technology and innovations issues.  Like any large organization, implementation of technology is a massive undertaking in a large organization.  Conversely, small and boutique firms can identify and implement new technologies almost in real time.  Implementing the technology at a “human” level is also much easier in a small organization.
  7. Everything in the commercial world is about to be turned upside down.  Consider it anarchy to one degree or another.  Anytime the pot is stirred, a reordering of players naturally occurs.
  8. Forget large companies that cannot even pay their rent or salaries.  The real clients law firms ought to be going after are the new and start-up companies who have no allegiance to any particular lawyer or law firm. These are the ones that will find you online and hire you because of the expertise, which you have revealed on your blog or website.
  9. Many clients are going to start engaging in “self help” right out of the gate.  If they come to your blog or website and it provides the insights they need, a percentage of them will decide to hire you instead of trying to figure their problem out themselves.
  10. The concept of “change” is in the air.  Obama is pushing it.  Adherence to the status quo is no longer in vogue. 

Comments

B

In turbulent times like this, it will be the law firms that adapt to change and meet the higher expectations of more educated clients that will survive, and prosper. Law firms who simply "keep on keeping on" will be left behind as clients demand expertise, clear expectations and deliverables, and accountability in their lawyer/law firm. Number 5 above is going to be the initial driver of change. The practice of law will ultimately align itself more closely to other service industries when it is all said and done.

John Ryan

When the client's start asking for alternative billing arraignments it should be a wake up call that the client is not seeing the value of the work done, compared to the bill they recieved. Once they start thinking that they are half way out the door to someone else. The answer is to do good work fast and bill's that explain what you've done.

GAL

John: That's a great point. The funny part of your post is that in hourly billing law firms, clients are constantly asking questions about the bill, grumbling about the bill, and certainly wondering about the bill. And you are correct. Lawyers do a terrible job with the narrative entries they use to describe the work that was actually performed. Many lawyers don't put much more than a single line. This is pretty stupid since just raises questions in the client's mind about what was really done. If you're going to have an hourly billing system, you better sell yourself in each time entry.

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