Thoughts on the future – change as a constant factor of legal life

Practice Tips, by David J. Bilinsky, Practice Management Advisor

“The Future ain’t what it used to be”
— Yogi Berra

Lawyers learn to look objectively at the evidence in a client’s case — both for and against. This paper examines the evidence for what I submit is a probable future for the legal profession. That future promises both opportunities and difficulties for the profession as we know it. Lawyers can start to change that future if steps are taken now.

The first factor is the oft-made observation that the rate of change is faster now than ever before. My perspective happens to be based in technology, but that is only one example, albeit a more apparent one. Some 20-odd years ago, computers began to replace typewriters and carbon paper. Next, BC-Online offered electronic LTO searches by modem. Now, email and Blackberries have largely replaced written correspondence. The internet has replaced paper-based research. Files no longer exist solely on paper, and “document” now describes an electronic file that is exchanged between parties containing hypertext links and digital signatures and that exists in dual formats (a PDF image sandwiched with a machine-searchable text). “Discovery” in a legal context requires lawyers to consider metadata and information stored on PDAs, in email and in deleted but unerased files on electronic hard-drives.

But these changes have not happened in isolation — the same changes have affected the legal consumer market. Thanks to the internet, consumers of legal services are increasingly sophisticated and this has affected the balance of power between lawyers and clients. Clients expect excellent legal skills in their lawyers — but in addition, clients are looking for corresponding people skills, management skills and leadership skills.

In the law firm setting, there is less and less emphasis on the lawyer as the "lone ranger;" today, increased attention is being paid to lawyers working in teams and using people skills. Witness the increased attention paid to practice groups and practice group management. Law firms are focusing on the strategic management, financial measurement and marketing/positioning of law firms — which are being driven by professional management teams that are no longer composed of lawyers.

Law firms are slowly witnessing the separation of ownership and management in firms (which is exactly what lawyers have been advocating for their corporate clients for decades). Furthermore, leadership in firms is being taken over by professional administrators. The truth is that lawyers have largely failed to carry the ball in this regard, due to the conflict between working on client files and working on firm administration. A further trend is the concentration of highly technical legal work in larger firms while smaller firms are being driven towards more commodity legal services. As an example, witness the decline in the fortunes of the real estate bar (which was typically part of a smaller firm staple diet). This work is largely seen as a commodity service, and all competition is solely fee-based.

Then there are third-party effects. For example, the new corporate e-registry has adopted a format that serves consumers over lawyers and law offices. This highlights that the lawyer as intermediary is less of a factor today than in the past, just as intermediaries are disappearing in other fields (just look at the decline in fortunes of stock brokers, travel agents and TV news programs, courtesy of the internet).

The near future

Technology will be used by governments and others to reduce the complexity of legal transactions (witness the corporate registry). E-filing will become a factor in the courts, driving firms further into working in a digital environment — from filing the claim, all the way through to adducing evidence electronically and presenting PowerPoint and graphically based closing arguments. As a result, digital trials will become commonplace. Trials will also become more technologically sophisticated, courtesy of software such as Summation, Concordance, Searchlight, MasterFile, Trial Director, Sanction, LiveNote, PowerPoint and others. The speed of trials will increase (with less time spent on the drudgery and time-consuming parts such as adducing and entering paper-based evidence). The courts themselves will be a big proponent of change in this area, as they necessarily seek to use technology to increase the number of trials and concurrently reduce their costs.

Lawyers will be driven to demonstrate how they add value to their clients. A lawyer working as an intermediary will diminish in importance or will be valued poorly. In this sense, advocacy programs designed to simply improve the image of the profession will be wasted money unless they are combined with teaching lawyers how to move away from commodity-based legal services.

Pro se (self-represented) litigants and clients who rely on legal services contracted with off-shore providers will become a bigger factor in the future. Websites will offer commodity-based services — from wills to incorporation services to real estate sales and on and on…). In order to preserve their billable hours, lawyers must evolve to provide unique services to clients that cannot be easily duplicated using technology or lower-cost employees.

The slightly farther out future

There will be a need for lawyers to be masters of several disciplines: technology and law are just examples. Clients will seek out lawyers who have in-depth knowledge in both the client’s area of expertise and the legal issues being addressed. These lawyers will add value in their depth of understanding of the matter at hand.

Lawyers will be driven to have increased people skills, as this will be a distinguishing factor by clients in selecting and retaining firms. Skills in relationship-building (the lawyer as trusted advisor) will become on a par with legal skills. Law firms will see the increased need for professional management at the highest level — with explicit strategic goals set, not just on revenues, but also on profitability, growth and market share. Performance management systems will ensure that all persons in a firm are held to financial and non-financial targets. Increasingly, these targets will be set by the firm management and tie each person — staff and lawyers alike — into the overall strategic plan for the firm and the practice group.

There will be a focus on what value lawyers bring to the table (what is it that lawyers actually do ?) Wills and estates are one example — lawyers will not just draw a will, they will design an estate and asset transfer plan. Along the way, lawyers must come to understand cross-border asset issues, tax issues, secondary residence issues, family trusts, charity donations, estate freezes, blended and broken family difficulties and other increasingly complex situations.

“Simple” or commodity wills will not be drawn by lawyers — consumers will use websites or notaries for this purpose. If lawyers do draw “simple” wills, they will either charge a market rate for doing this work (realizing that other lawyers will be charging drastically lower fees) or they will realize that they are being paid a vastly reduced hourly rate for doing so (and why would you take on the risk of the file while being paid so little?)

As the world changes to a global market, there will be an increased use of off-shore legal services. Today we have off-shore firms in English-speaking common law jurisdictions offering legal research and back-office services to law firms. It will not be a stretch for those firms to reach out to clients directly via the internet. Or they may set up offices here in North America and simply refer all the work back to their home jurisdiction. With today’s communication technology, this is easily done.

Law schools will be incorporating marketing, management, finance, technology and, most importantly, people management skills into their black-letter law curricula, as law firms will be demanding these skills from their young lawyers (this is already the case in US law schools).

What can be done

Personal and firm level

Lawyers must take control of their futures and invest in people, business and practice management skills training, along with black-letter law education. Strategic planning and performance evaluation must become commonplace in firms; this planning should be implemented, right down to individual personal growth and skill targets. Professional managers should be brought into firms to devote their full attention to future directions and to allow lawyers to assume supervisory (directorship and ownership) duties. The separation between setting policy and implementing policy will increase. Management reporting structures will evolve to provide meaningful feedback to both lawyers and management to allow them to respond appropriately to changes.

To preserve their hourly rates or annual fee targets, lawyers must learn to add more value to the services they provide to their clients. One strategy to accomplish this is to narrow and increase each lawyer’s depth of legal knowledge in discrete legal areas, as clients will seek out lawyers with depth of talent and sophistication in their area of need.

Practice group level

One possible effect of implementing practice group management is to create competitive groups within firms. Resources of the firm — marketing, IT, staff — will be allocated to the practice groups based on profitability (not on revenues, since it is pointless to spend $1 million to only raise $800,000 in revenues). Under-performing practice groups will either have to implement strategic and tactical decisions to increase their profitability or be content to be secondary in importance when it comes to accessing the best assets of the firm.

There will be increased emphasis on lawyers seeking to understand how they add value to services provided to their clients. In this connection, law office management will increase feedback mechanisms with their clients, in order to make strategic decisions based on hard information.

Firm level

By far the most important factor affecting the future of the legal profession will be leadership. Leadership skills, or the lack thereof, will drive the profession to its future. Leadership will move lawyers from a reactive mind-set (sue someone after an event) to a proactive mind-set (take steps to encourage preventive action). The implications of leadership are profound:

  • Firms move to adopt a strategic position in the marketplace, directing each firm to the type of work it desires, rather than accepting work that comes in the door;
  • Explicit revenue, billing and profitability goals are set and reviewed relative to results to date;
  • Performance management is implemented, holding all staff and lawyers to explicit personal and financial goals or targets;
  • The firm adopts a professional management structure and sorts out ownership, management and directorship duties and the separations between them;
  • Marketing plans present a clear and focused image of the firm that is consistent with the service expectations the firm creates and the services that clients actually experience.
  • The financial reporting mechanisms of the firm deliver timely and accurate information on the performance of lawyers, files, clients, practice groups and the firm as a whole in a format and manner that allows the management of the firm to take early corrective action;
  • Last, the firm culture evolves to encourage leadership at all levels, from allowing staff to reach their potential to encouraging active mentoring of associates and the grooming of future firm leaders.

Nothing less than the future of the profession is at stake. I am hopeful that lawyers can develop the necessary skillsets and learn to adapt to constantly changing circumstances, particularly as the bulk of the changes are yet to come. However, without encouraging and developing strong and effective leadership skills, we may be saying that the future of the legal profession "ain’t what it used to be. "

 


This article is largely based on a recent in-depth discussion with Vancouver lawyer Bill MacLeod. While the views expressed herein are strictly mine, all credit for the article may be attributed to Bill and all criticisms may be directed to me.

 

New ABA guide

The ABA Law Practice Management Section has just released The Lawyer’s Guide to Strategic Planning: Defining, Setting, and Achieving Your Firm’s Goals by Thomas C. Grella and Michael L.Hudkins (http://tinyurl.com/64k6t).

This book is written by a law firm’s managing partner, together with the firm’s law office administrator following their experience in taking their firm through the entire strategic planning process. It is a practical resource on how to establish goals in key areas such as law firm governance, competition, financial management, technology, marketing and competitive intelligence, client development and retention. This is not a theoretical book — it is a practical resource full of ideas of how to implement and monitor your goals to remain on your strategic plan. I also happen to know the authors and can endorse this book highly.