Inside the crystal ball – one possible future for lawyers and law societies

crystal ballJordan Furlong has seen a lot of change since he first became a lawyer.

“When I was called to the bar in 1995, the Law Society of Upper Canada was prosecuting paralegals. Today it regulates them.”

But in many ways, Furlong is astounded by how, until relatively recently, the profession of law has managed to escape significant change, despite the evolving world around it.

“If you took a lawyer from the turn of the previous century,” Furlong told the Benchers at a presentation to them at their October meeting, “and you put him into a law firm in the year 2000, he’d be stunned by the technology and hopefully he’d be impressed by the diversity and other things. But when you actually sat him down to do some work, he’d say ‘this looks familiar to me.’ You take a doctor from 1900 and put him in a modern hospital, and there’s absolutely no comparison. He’d have no idea what to do because so much has happened. The world has changed, but by and large lawyers haven’t.”

Furlong is a consultant who makes a living, in part, out of predicting where law will go next.

Three themes emerged from his presentation to the Law Society: 1) the marketplace is rapidly changing; 2) those changes will have a profound impact on the way lawyers practise law; and 3) the combination of those forces will influence how law societies will regulate the profession.

The changing marketplace

For decades lawyers have billed their clients at an hourly rate, but many clients are no longer accepting that fee structure. Corporate clients are feeling the pinch — especially since the recession — and several are looking for ways to save. Pushing back on their lawyers’ rates and demanding predictable fees is one way many have tried to do that.

Individual clients have also begun demanding fixed fees. The Law Society has taken steps to make this structure easier for lawyers and their clients. In 2008 the Benchers approved recommendations from the Unbundling of Legal Services Task Force to make it simpler for lawyers to offer limited scope retainers. 

Jordan Furlong  
Jordan Furlong  
   

But many people aren’t using lawyers at all. It’s a rare barrister these days who hasn’t encountered an unrepresented litigant. And solicitors have seen new competitors charge in on what was formerly their exclusive turf. As Furlong puts it, “lawyers still dominate the legal marketplace, but competitors have carved off huge chunks of lower-level work. Some are large-scale corporate entities, especially title insurers that have eviscerated the residential real estate bar. Others are technology-driven, the descendants of the do-it-yourself will kit: free, customizable, downloadable contracts. Nobody expects these non-lawyers’ share of the marketplace to shrink in the years to come.”

And then, adds Furlong, there’s also the impact of globalization, which has led to competition from “primarily low-cost but competent lawyers in foreign countries who perform routine legal tasks at massive cost savings.”

In addition, Furlong believes the next generation of lawyers, millennials, will have a profound impact on law firms.

“They are going to keep pouring into this profession for another 15 years. By the time they’re done, they’re going to constitute a larger portion of lawyers in law firms than boomers did.”

Furlong stressed that’s important because millennials have their own value system and significantly, “time does not equal money for them. That matters because the equation time equals money is the foundation of the billable hours system for lawyers. So there is no chance that they will run law firms based on the billable hour, because it just doesn’t make sense to them.”

But if Furlong’s crystal ball is to be believed, this is just the tip of the iceberg of what’s to come.

“Even these changes are incremental compared to what the next decade, and the one after that, will bring,” advised Furlong.

“So far, what we’ve seen are essentially adjustments to the basic lawyer-driven model — shifts in the power balance, the first signs of a breach in the closed legal marketplace. The next 20 years will overturn much of what lawyers today still take for granted and will, for the first time in centuries, give rise to a legal services marketplace in which lawyers are not the dominant providers.”

The crowded marketplace

 The Crowded Marketplace

What the changes mean for lawyers

Furlong predicted that over the next 20 years there will be six significant changes:

1. New roles for lawyers. According to Furlong, lawyers will remain “the premier suppliers of advocacy” and they will “specialize in counsel.” He added that, “while the volume of this work is nowhere near what lawyers once handled, it remains lucrative and satisfying.”

2. Widespread automation of legal services. Furlong sees a world where “even the most complicated tasks have been templated, flowcharted and delegated to software” and where “comparatively few lawyers sell tangible products at a profit” because Furlong foresees that “this type of work, which used to constitute the majority of many lawyers’ offerings, will be largely automated.”

3. Non-lawyer service providers. Furlong envisages a future where “both corporate and consumer clients are unable or unwilling to spend much money and are content with ‘good enough’ results.” This will lead to the flourishing of “plenty of cheap-and-cheerful legal service providers, most of them powered by new technology and based outside the legal profession.” Furlong forecasts that these providers will be regulated by government regimes similar to consumer protection laws. He believes the spinoff of the relative affordability of these services means that access to justice will be “greater than it’s ever been.”

4. Client pricing drives lawyer efficiency. Furlong calculated that fixed or predictable fees will be the norm for all but the most unusual matters. “Efficiency, once the enemy of profitability in billable-hour law firms, is now virtually the only way to ensure profitability in modern ones.”

5. New law firm models. Furlong predicted that in the coming decades most law firms will have abandoned the partnership model and “now operate essentially as corporate entities.” He believes most of the tasks that associates once did and billed for will be outsourced or automated.

6. Globalization is ubiquitous. Furlong suggested lawyers could learn from the experience of the North American automobile industry. Originally it feared “cheap” Japanese imports, but Japan quickly started vying for the high-end market as well. Furlong warned that North American automakers were caught unprepared for the competition and that “the same fate awaits Western law firms that mistakenly think offshore lawyers will be content to keep taking low-level work from the United States, Canada and England indefinitely.”

What the changes mean for regulation of legal services

“In practical terms,” Furlong said about the current system, “lawyers have regulatory control or direct influence over the governance of the legal profession and the delivery of legal services to the public.” Furlong explained how these two issues, in his opinion, have been inaccurately intertwined with self-regulation.

“Lawyer self-governance is a centuries-old tradition that can trace its lineage back to the Tudor period and that can be defended on a number of grounds, including the rule of law and the danger of unfettered state power. Lawyer control of legal service delivery is more of an accident of history, one that came about because only lawyers were qualified to provide legal services. Self-governance, in a circular way, evolved into marketplace governance.”

Because of that, Furlong told the Benchers, lawyers’ regulatory control over the entire legal services marketplace “will struggle to maintain its position in the years to come. The time is passing when most of the competent providers of legal services within a jurisdiction are locally licensed lawyers. And if locally licensed lawyers are only one of a number of competing service providers in a jurisdiction, on what basis can those lawyers claim fitness to regulate their competition?” asked Furlong.

In addition, Furlong stated that globalization will present a challenge for law societies “as they will have to address the fact that lawyers situated outside their jurisdictions are delivering services to clients inside their jurisdiction, and then square that fact with their regulatory mandates.”

He added this will make it extremely challenging to enforce unauthorized practice of law provisions “in a wired, globalized legal marketplace.”

In the final analysis, Furlong believes “the likeliest eventual outcome is that within 10 to 20 years, law societies will still exist, but will have seen their mandates limited to governance of the legal profession alone, not the regulation of legal services generally.”

Furlong warned, “this isn’t just a blip, this isn’t just a downturn. This is more substantial. This is a transformation of our profession.”

He concluded that, in order to survive, both law societies and lawyers will need to focus on what will best support the interests of clients, themselves, and the broader goal of access to the justice system.


The Law Society — thinking toward the future

Investigating impact of technology

As technology advances, so too is the pace at which it is transforming the practice of law.

  • Cloud computing. The Law Society is considering the impact of cloud computing, which involves accessing data processing and storage applications via the internet. Many virtual law firms rely on this technology to share documents with lawyers and clients. On September 16, 2010, the Executive Committee struck a working group to:
    • look into what rules and policy the Law Society will need for BC lawyers who are using cloud computing and/or remote processing and storing of business records; and
    • consider BC lawyers’ use of electronic storage, both in and outside of the province.
Putting the public’s needs first

Jordan Furlong predicted that, in order to survive, law societies will need to focus on the interests of clients and access to the justice system. Furlong’s view aside, the Law Society has several initiatives under way that do just that:

  • The public interest. The Benchers have approved in principle a request for changes to the Legal Profession Act that will enhance the ability of the society to regulate in the public interest and that emphasize the public’s interest is paramount.
  • Access to justice. Many steps have been taken to fulfill the Benchers’ strategic objective of enhancing access to legal services. For example:
    • The Law Society is working on a strategy to enhance access to legal services by improving the retention rate of lawyers in the legal profession including, in particular, Aboriginal lawyers.
    • In July 2009, a business case was developed by the Retention of Women in Law Task Force outlining a series of recommendations aimed at improving the retention of women lawyers in the profession. Staff is currently following up on two of the recommendations.
    • In order to enhance the public’s access to competent and affordable legal services, the Benchers approved a plan in October to increase the roles that paralegals and articled students can perform under the supervision of a lawyer.
    • In 2008 the Benchers approved recommendations from the Unbundling of Legal Services Task Force to make it easier for lawyers to offer limited scope retainers.