Can Law Firms Escape Their Own Kodak Moment?
A while ago “Kodak Moment” used to be a moment worth savoring and capturing with a camera. Fast-forward, and today this term marks disruptive movements that can rupture an industry.
And, as this article points, there are many (flawed) assumptions on why Kodak had a downfall. Most can be summed as lack of innovation, not investing in technology, not leveraging internet enough as a marketing channel.
Yet, these assumptions proved to be wrong. Kodak did have a pretty innovative RnD, they did invest in new technologies, and they did leverage photo-sharing web start-ups to attract new customers.
The only thing that Kodak did not do? They failed to change their business model. And that solely doomed the company along the way.
What can you learn from the Kodak Moment?
The blogosphere is loaded with (sound) advice that law firms must embrace technology. Law firms are portrayed as low-tech organizations, and profession described as technology averse.
But what if I told you all of the above is simply not true? Did you ever stop to consider a possibility that law firms do use lots of technology in their work process? Granted, some do more than the others. Still, firms use emails, word processors, and some form of billing / time tracking systems.
And, what if I told you the actual problem is not about law firms not using technology? Alike Kodak, Law Firms (depending on size) can spend lavish budgets in implementing systems. So, it seems law firms also invest in tech.
However, alike Kodak, law firms seem to be:
Sticking with their old business model (that is - selling hours, not results and products); and, as a direct result
Investing in technologies that support their current business models, and further impede their change.
Sticking with the old business model
Let us return for the moment to the Kodak example. I mentioned Kodak did use technology. Yet, in the end, all the tech in Kodak was still supporting their old model. Namely, Kodak was still insisting their customers will continue to print out images. And that bet cost Kodak dearly.
Lawyers, on the other hand, are sticking for the most part to the Billable Hour model. And there are many problems with the Billable Hour, some of those being:
Billable hour is not incentivising any innovation, thus slowing it down;
Billable hour does not give any clarity on the cost for the project and client;
Billable hour suggests all the wrong benchmarks for the success of a project.
Nowadays it becomes dangerous to stick with hourly billing. Clients demand certainty, accountability, and transparency from their lawyers. Market forces are real and merciless.
Just take it from the below examples:
Legal Process Outsourcing is peaking. Some of the most notable players in the field started acquiring prominent law firm offices, to further fuel their growth;
In-house legal departments are internalizing many standard and low-value tasks. Effectively they are withdrawing billions (yes, figure with the "B") of USD from the market;
General Counsels are being accompanied by procurement specialists during law firm pitches (signals the ever-increasing price/value sensitivity);
Peculiar clauses in engagement letters (segments of work rated at the zero charge, e.g. for the associate level of work).
So what can law firms do to stay afloat and thrive?
Short answer - don’t be like Kodak. As John Chisholm said for LegalTrek blog, lawyers have to stop selling something clients don’t buy.
To stay in business you must follow your customers. And, as we said, clients need budget and turnaround predictability. Further, clients want to be in the loop with matter progress.
And with a bit of an organization, you can achieve all that. Yes, software will help, but not just any solution.
What is the right technology?
In a nutshell, the right legal technology supports your law firm into sustainable profitability. You will be looking for a solution that does not limit or lock you into the traditional business model of selling hours.
Today you need a system that accounts for complex fee arrangements with your clients. Not one which forces you to simply track hours.
Additionally, you need a project management to focus your team on the right actions at the right time. Project Management also gives you oversight on your team delivery.
That way, instead of producing timesheets with systems, you will see exactly where you are in the delivery process. You will spot bottlenecks and risks of breaching clients’ budgets, and be able to react on time.
Such solutions support you as you guide your clients, and help you take a great care of their problems. On time, and on budget.
Who would not love to retain such a lawyer?
What can LegalTrek do for you?
LegalTrek is a comprehensive practice management solution. It combines the most mature billing system with innovative project management. LegalTrek supports your workflow, giving you full oversight of legal projects and internal processes.
LegalTrek is designed to help you with:
Client-intake and management;
Project assignment, management and delivery;
Complex Billing Arrangements (traditional, alternative, combination)
Work reports, and automatized Invoicing.
With LegalTrek you will:
be in full control of your service delivery process;
Have a centralized information base;
use precise billing that ensures correct reports and invoices for your clients.
LegalTrek supports law firms with sophisticated clients in their service delivery, billing, and invoicing. Law Firms that choose LegalTrek mostly practice in the commercial and corporate sector. LegalTrek enables partners and Office Managers / COOs to deliver the premium service, while they keep clients in a close loop.
Phone: +49 (0) 30 30808434