Entity-Driven Legal Services: The Great Legal Reformation’s Ultimate Legacy
2017 is a special year for many Europeans as it marks the 500th anniversary of what is generally accepted as the start of The Reformation. According to legend, on October 31, 1517, a former law-student-turned-obscure-monk by the name of Martin Luther, strode confidently up Wittenberg’s Schlossstrasse and nailed his now famous 95 Theses to the door of the Castle Church. His ideas quickly spread across Europe and the world was never again the same.
Five hundred years on, we see the beginning of a new reformation; a reformation that once again seeks to change the seemingly unchangeable; a reformation that seeks to create a profound and lasting change within a venerable, ancient profession; a reformation that is beginning to reverberate around the globe via a new set of social networks and media.
The Great Legal Reformation.
We now live in a time when many are questioning the time-honoured method of delivering legal services; a time when the legal profession is increasingly being forced to justify its methods - and perhaps even its existence; a time when dissent against the old order is becoming normalized and circulated globally; a time when newcomers are re-writing the script and challenging the old ways.
As a result, the road ahead for traditional law firms is no longer straight, smooth or predictable. A growing body of evidence suggests that demand for legal services from traditional law firms is flattening. The “more for less” challenge that corporate clients face is often resolved by building internal legal teams to avoid sending work to law firms, or by disaggregating legal work among different, non-law firm players in the marketplace. Legal technology continues to show promise at eliminating some of the work that lawyers have traditionally done. And technology combined with growing consumer confidence in internet resources, is creating a generation of legal do-it-yourselfers among every day people. And so it goes.
Yet, despite it all, the law firm delivery model has seen little change. It remains lawyer-centric and heavily-laden with expensive talent that is not terribly loyal. Advancement among lawyers in this model is based upon a ridiculous duel to the death, aptly named, the “tournament”; an expensive process where firms continuously hire, train and then terminate associate lawyers. On the other hand, advancement opportunities for other employees of many law firms are virtually non-existent. This is an operational model whose success rests almost entirely upon three pillars: a perpetually high desire for legal services to be provided in the traditional manner; a marketplace wary of non-traditional providers; and clients that aren’t cost-sensitive. The Great Legal Reformation is eroding all three of these pillars and ratcheting up stress on the existing law firm model. We can already see that stress in a variety of metrics; partners are no longer permanent, associates have little chance of becoming partners, contract lawyers and paralegals continue to replace full-time lawyer hires, and there is a higher than average rate of depression and addiction among lawyers. Factor in growing client unhappiness, not with quality, but with service delivery and complete model breakdown is no longer a question of if, but when.
Forward-thinking law firm leadership will see the stress fractures and will embark upon a course of long-term transformation from the old lawyer-centric model to an enterprise or entity approach to providing legal services - Law as a Team Sport. These leaders will seek to deliver service through a proprietary mix of people, process and technology, seasoned by a culture of continuous improvement, all of which will create competitive advantage through unique experiences that clients will be unable to find elsewhere.
A law firm that takes an entity approach will scale, not by hiring more lawyers, but by increasing the number of opportunities for team members who have no interest in taking bar exams. These firms will see lawyers as just one piece of the puzzle, instead of the entire puzzle. Just as economists spoke of the “jobless recovery” from the Great Financial Crisis, forward-thinking law firm leadership will embrace “lawyerless growth”; the ability to grow revenue and serve more clients with the same number of lawyers. This scale will be achieved in part by understanding the value of continuous improvement; a disciplined approach to critically and continually assessing what is being done and why, to reduce timelines, improve quality and provide more cost-effective legal service. This is not a cost-cutting measure - it’s a smarter and better use of talent. A philosophy of continuous improvement also supports growth in another way. It inevitably causes team members to improve workflows and training so that select team members can perform higher value work - work that used to be done by lawyers - at reduced cost to the firm and with greater personal benefit to the team member; which also frees up lawyers to do other more valuable work. But continuous improvement goes even deeper than that.
In Daniel Pink’s excellent book, Drive, he outlines how, beyond having a satisfactory salary and a congenial workplace, team members crave competence and autonomy. An important part of continuous improvement philosophy is the freedom to question, challenge and experiment without crushing criticism; allowing every team member to suggest changes to how her work is being done. Never has this philosophy been more important for law firms than now, when they are awash in Millennials; the generation most vocal about their desire for autonomy, learning and empowerment.
Another inevitable result of continuous improvement will be the question often raised by Millennials, “Isn’t there an app for this?” A question bolstered by a growing legal tech industry that has normalized the idea that technology has a very important role to play in legal services, whether through expert systems, Artificial Intelligence, or simply better use of existing software. There is already a growing appetite and clamour from Millennials for technology solutions or technological assistance for their daily tasks. And so, lawyerless growth will also be achieved through smarter and better use of technology, particularly in combination with workflow and continuous improvement philosophies. How can it not? We have already seen significant productivity gains with the current crop of legal technology – much of which remains grossly under-exploited. A focus on lawyerless growth and on the creation of unique client experiences will force a change in the role of IT personnel in law firms; they will morph from being someone who simply keeps the system secure and running, to being explorers working hand-in-glove with all team members to create a better client experience. And while there will be some lawyers whose inclination for technology will move them to seek a greater technology skill set than others, in-depth technological skills will remain in the realm of technology subject matter experts who understand what law firms and their clients require. All of this leads to a question that will be distressing to many lawyers. If some legal work can be solely performed by technology, and other portions can be performed by team members supported by technology, process and workflow, how many lawyers does a law firm really need? And who should really be managing and leading such a firm? In an entity-driven model the unique client experience does not revolve around a specific person; everyone on the team is
important, but no one is that important. And so entity-driven models have no place for lawyer-dominated hierarchies and will refer to everyone as a “team member”; law firm marketers for entity-driven firms will make statements like, “we have 500 team members across the country to assist you.”
The previously discussed aspects of an entity-driven model will create a multitude of opportunities for a diverse range of skill-sets, which in turn will attract and retain talent, as well as increase diversity of thought and experience at all levels of the organization; something that management gurus continue to say is the key to success in every industry. As unique client experiences are created by this divers workforce, so too will a strong and loyal relationship created between the client and the firm, rather than between a client and an individual lawyer; making clients and lawyers, more sticky.
An entity-driven approach will also cause firms to view their personnel very differently. The tournament has no place in an entity-driven approach as it doesn’t make economic sense to view personnel as unlimited resources to be hired, trained, then cast aside for a fresher face. Success in an entity-driven approach will be found by investing heavily at the initial hiring stage with an eye to keeping all new hires for a long career.
Conclusion
The current law firm operational model is beyond its “best before” date, and it is demonstrating its inability withstand the stresses brought about by The Great Legal Reformation. Therefore by necessity, legal services will transform from a lawyer-dominated service to an entity-driven service dominated by people, process and technology; a service that is merely augmented by lawyers. It’s the dawning of a new era of legal services as a team sport.
Mitchell Kowalski is the Gowling WLG Visiting Professor in Legal Innovation at the University of Calgary Law School, the Legal Innovation Columnist at The National Post, and Principal Consultant at Cross Pollen Advisory where he advises in-house legal departments and law firms on the redesign of legal service delivery.
He is a Fastcase 50 Global Legal Innovator and the author of the critically acclaimed book, Avoiding Extinction: Reimagining Legal Services for the 21st Century.
This article includes some ideas from his forthcoming book, The Great Legal Reformation: Notes from the Field to be published in September, 2017. Follow him on Twitter @mekowalski or email him at mekowalski@kowalski.ca.
Mitchell Kowalski on YouTube: "The Great Legal Reformation"