In the current law firm world, everyone — lawyers and staff — is affected by the ongoing transformation in client expectations and legal service delivery.
As the legal profession continues to contend with everything from layoffs to fee pressures, upheaval is the “new normal.” The world many firms previously knew is gone. Adapting to that change in order to stay competitive, to thrive in the “new normal,” is essential in 2013 and beyond.
Consider this example: LegalZoom, the online provider of self-help legal documents, has for several years battled with the North Carolina Bar Association about the bar’s attempt to prevent LegalZoom from what it considers the unauthorized practice of law in the state. This reflects an economy-wide change.
From travel agents to print journalists, “middleman” professions are increasingly irrelevant due to computer and Internet technology advances. Business and individual clients likewise assume that electronic tools make lawyers increasingly irrelevant to help with commodity services like drafting a will, filing a patent application, or registering a deed.
Technology will continue to affect the cost and quality of the legal service/product delivered to the clients. With overhead cut to the bone, partner income stagnating and fewer students entering law school, the legal profession must change.
The firms that adopt technology to reduce the costs of operation, and then pass those savings onto the client, will be successful. These firms will focus on small to mid-size businesses and individual issues that will always be there as long as people need lawyers.
Improving the delivery of legal service through knowledge management and client relationship management software (to use two examples) will make legal costs competitive. And it is the overall legal cost, not the hourly rate, that the client cares about.
However, technology alone is not sufficient to thrive in the new normal. Lawyers must also place more precise focus on getting work and getting paid. For getting work (more generally, marketing), focus on a target market and become the recognized thought leader in that market or industry.
A thought leader is someone who has evidenced their capabilities, their knowledge of the industry involved, and the leading stature of their expertise by becoming known to the public as the author of a book or article, a speaker at a conference or in the news media, an Internet leader in podcasts or blogs. The channel of ideas distribution is not magic; you must be all over because you never know from whence that phone call to engage you will come.
For getting paid, watch your realization rate closely. Realization is simply the percentage of what is billed that is actually collected. Low realization means you need more cash to stay in business while waiting for clients to pay — the equivalent of extending them credit. Strive to get paid quickly using contingent, fixed, capped or value fee approaches to make the most of the leverage from technology. Alternative billing founded on value to the client, not just units of time, can help ensure prompt payment.
In the new normal, getting the work, doing the work with the help of technology, and getting paid for the work will all be transformed. Business schools call this marketing, production and finance. Law firms must consider them the survival tactics of the future.