Posted by Tony Arnold, director of Legal Futures Associate Zecter
Many people have predicted a seismic change in the legal profession towards a digital commodity service in the next few years but that shift is happening right now.
For those savvy firms that are now embracing it, they are finding they have access to a whole new world – the latent consumer.
Did you know that by 2020, it is predicted that 70% of people will look for a video online via Google before seeking professional advice? In fact, that number is already at 50% today.
How good is your website? When did you last record a video to generate a client lead?
I transform organisations and I’m not a solicitor, so that helps me to look at the legal sector from the outside. However, to understand the future of the legal sector, it helps to quickly look at another profession, namely banking.
In 1991 I was running a securities department in a high street bank, in Wolverhampton. When we took any lending security, the details went into ledgers, which were a number of 18-inch square by four-inch deep tomes that all went back onto the trolley and into the safe at night. The details were all neatly handwritten under the customer’s name, with entries such as ‘2nd legal charge over 41 Quarry Avenue’.
It was all in there, legal changes, debentures (fixed and floating charges over company assets, agricultural changes, guarantees). I even vaguely remember once taking a ship’s mortgage that required nailing a notice to the mast (I used tape) and a charge over a plastic tree in a pub garden. I took possession of a pub, enforced a guarantee in court against a particularly stern barrister, and tried to check the stock covered by a debenture only to find it had been all loaded into a number of lorries the night before and vanished.
Happy days indeed but there was no copy of the security, no backup and especially no computers involved. Each case started from scratch with a paper aide memoire taking extensively trained employees, like me, through the process step by step. The final output was then randomly checked by peripatetic inspectors who would descend, like Dementors from Harry Potter, when we least expected them.
Then, over the following decade, the security-taking process was systematically dismantled, outsourced and automated. Processing centres were established to centralise the remaining skills and reduce the costs further.
Whilst I’d left sometime before, my branch closed and is now a pub, along with many others over the years.
That story started 25 years ago, which may seem a long time to the younger readers, but is just an eye-blink in history. Starting from a completely manual, paper-based, local craft, which had remained more or less unchanged for decades, it only took 10 years to dismantle. The outputs were still the same; customers still had secured loans, mortgages were approved and the wheels of industry were still oiled but the underlying internal structure had changed forever.
Now Fintech is changing the profession again in a huge way.
So, how does that apply to the legal sector? In general terms, the legal sector is a distributed, manually intensive industry, where a bespoke service is still the norm and technology hasn’t really started to automate any processes, let alone disrupt the traditional model.
Why should anything happen in the next five years, that hasn’t in the last 100?
Innovative technology is the reason. Technology power continues to advance at an exponential rate. Processing power is still doubling every two years, Internet speeds are approaching 100mps in some areas and every year doubles the storage you can get for the same price. Agile and transferrable software is now being generated at break-neck speeds. Technology is no longer a major investment that turns into a disappointment. Technology is now cost effective and an essential commodity for any firm that wants to be competitive in 2020.
Think of it as filling a pond with water. We started in the 1980s with only a litre jug and a tap and nothing much seemed to happen. Then it doubled each trip to two jugs, then four, eight, 16, 32, 64 and then 128. At the same time, the tap was getting bigger and the flow of water matched the jug demand. After only 13 trips, jugs can no longer hack it and we need a tanker to carry the 8,192 litres of water.
We are at that point now. What was painfully slow has now become instant – the technology is available today to quickly fill your pond in one go. Technology gives you, your customers and your potential customers precisely what they need.
However, that’s not the end of the analogy, far from it. With the technology advancing exponentially, in another eight trips, we’ll be able to fill an Olympic swimming pool instantly.
Therefore, the assessment I’m making of the law firm in 2020, is based on three factors:
- We are moving into a technology based internet society, at an exponential rate.
- Legal work is based on the practical application of knowledge.
- There is untapped demand for legal knowledge, which the current model cannot satisfy due to cost, accessibility and availability.
To illustrate those points, I’ll use a simple personal example from a few weeks ago.
My daughter’s partner wanted to change his surname. In the print-based past there would have been only one option: make an appointment to see a solicitor, take the time out, incur the cost and let them use their experience to create and witness the documents. In effect it is done for you.
In the internet society, however, a simple search reveals the base knowledge from the .gov website but that is academic knowledge and the ability to apply it is lacking.
Further research then opens a number of forums where the topic is discussed, the problems aired – Why ‘enrol’ it? What do online companies do for you? – and the pointers for a successful conclusion, including simple deed poll generation. Thus now the original knowledge is firmed up with practical experience.
With a deed poll generated at no cost, six originals printed and witnessed and a free list of everyone to inform, with links to their sites, we completed the job in less time than I could get an appointment at a local solicitor.
Whilst this is a simple example of the competition firms are starting to face, we are only at an in-between stage at the moment, moving away from print-based knowledge but without having the fully formed internet-based world ready. That is why the current wave of on-line sites are emerging, to exploit the technology to deliver their services and to allow users to complete the task at little or no cost.
I’d count their use of mass market tailoring as old technology over the internet; completing pre-set fields and then printing a form doesn’t, as Shania Twain would say, impress me much.
So given all that preamble, what does the law firm of 2020 look like? If technology change is accelerating and the internet-based society is replacing print, what will happen in the next four years?
The challenges to firms will be that:
- Legal knowledge will be increasingly available at low or no cost;
- Expert experience will be available online, as also will be the experience of those who’ve been through the process themselves;
- Cost will drive people who want legal advice to sidestep the traditional law firm unless they are providing the service they want; and
- The huge latent demand for legal services will be satisfied through online means and will bypass any interaction with firms.
Against those challenges, firms must look for ways to become more visible online by:
- Becoming part of specialist collaborative online platforms for legal services;
- Contributing to the latent demand solution, by offering some advice and support without fee;
- Establishing specialist fee-paying activities;
- Undertaking a radical review of processes and decide the best/cheapest person to do parts of it;
- Using online software, central storage and ‘pay as you go’ services for all the firm’s technology needs;
- Not buying technology the traditional way – use the technology of the future; and
- Looking to outsource the mundane and routine into processing centres.
In short, the key message for firms in 2020 is that to survive they must pro-actively collaborate with the end users of legal services, rather than be reactive consultants. Whilst many may feel this is too difficult, compare that to filling a swimming pool in one second. Now that’s difficult!