I am never tired pointing out the legal sector has become extremely competitive and that firms, big and small, must react to this paradigm shift. It has taken a long time for the legal sector to require changes both in the business model and in the way that services are provided. But the time has come. Clients have an undifferentiated view of legal technical services, in particular lawyers with the same category and type of law firm, and they look for something more when choosing a lawyer. They need to understand how they work, how they are going to be invoiced, to know the cost/efficiency…. But innovation requires a different outlook; questioning what has always been done in a particular way, finding new solutions or inventions and taking curiosity to the extreme - is an attitude.
The legal sector is filled with traditions and customs which are deeply rooted in a profession where past models are no longer any use. This does not devalue the profession, but it means that it should evolve and respond to changes and customs that the market is imposing on them as many other professions underwent earlier.
There are many external environmental inducers which are driving change, mainly clients’ new requirements and their perception of the legal business. But beyond the external changes a change in attitude is required, an internal revolution that should be taught right from the law faculties themselves with subjects such as innovation or entrepreneurialism.
The profession has not changed in essence, but it has in format, in the optimization of processes and in all aspects referring to management. This change affects the profile of the lawyer, who needs to add new strategic and managerial skills in order to practise in an uncertain environment where it is necessary to reinvent oneself. These new skills cannot be improvised and are part of what it means to be a lawyer in the third millennium. They are no longer an extra to be integrated, but have become an intrinsic part of the profession.
As the 2018 Report on the State of the Legal Market states, technology helps to adapt efficiently to clients’ requirements who are no longer prepared to play by the old rules of the sector. Competitiveness and the standardization of particular legal services have impacted on fees being lowered. The “more for less” urge from the firm’s business influence technology and strategic planning in order to have a niche in the market. I have had the opportunity to visit innovative firms in the United States where they have specialized teams dedicated solely and exclusively to pricing, and are trying to tailor profit to efficiency in service.
The hourly rate ratio is not longer useful for billing and is only valid as a way of internal management control. Lawyers should understand where the value is for their clients and establish their pricing policy in accordance with that. Not an easy task, because it is part of the external perception that clients have. Billing at a fixed price requires management control that assures viability of the projects.
The search for alternative models to billing by hours has driven us to find efficient and profitable control systems, where new professions are created, such as legal project manager or engineer of legal processes. A lawyer needs new disciplines and new professionals to help him strengthen his business vision including a collaborative culture by specializations with other law firms or with clients themselves. Billing at a fixed rate requires management control which ensures the viability of projects.
In my opinion, the three points where technology is fundamental when providing legal services are: knowledge management, comprehensive client management and communication platforms with clients and collaborators. The Report has shown a big increase in suppliers in these three aspects and selecting technology is so important that it marks the difference in the models of the law firms.
I underline that innovation starts with a change in the lawyer’s attitude. It can be based on technology, but without this attitude, the lawyer can continue to convince himself that the profession is something else and remain stuck in the traditional practise of law with no reaction capacity to the very profound changes that clients are demanding.
The evolution of the profession prompts us to professionalizing management and observing and importing techniques from other sectors and services. This has impacted on the law firms’ business models and has caused considerable disruption in the way that services are provided. In the Anglo-Saxon world they are called Alternative Business Structures and they are models which run away from the very traditional pyramidal system of law firms and are more akin to real legal services companies. Their approach is different, but they have focused from the start on management and effectiveness.
Specialists will no longer focus on the internal practise of law (corporate, tax, labour...) and will tend to orient themselves to the needs of the client on the basis of sector specialization or type of clients or projects with a language orientated to solving the problem instead of describing the legal service. Proposals will no longer be reactive but predictive when commenting on scenarios, resources and prices.
The revolution has begun. These are times full of challenges and risks, but it is, undoubtedly, one of the most interesting in the legal profession. This is the law of the third millennium, which has evolved, with more expertise and resources; with a lawyer profile that is inquisitive and interested in innovating in each proposal.
About the Author
Eugenia Navarro is a Chemical Engineer from the Institute Químico de Sarrià and holds a degree in Chemistry from the Ramon Llull. She also has a Master in Strategic Marketing from ESADE and participated in the program of Leading Professional Services at Harvard Business School. After years of practicing as engineer in mass market companies in the departments of quality assurance and product development, she decided to try the adventure of ‘marketing specializing in services’. It was in 2000, the year she joined Baker & McKenzie Spain as Marketing and Business Development Director. She was one of the first in such a position in the country. In the end she worked for Baker & McKenzie for seven years.
Currently, she is an independent consultant in legal marketing and strategy for law firms specializing on mergers, internationalization or brand positioning; Has a high activity as a trainer and being director of management programs for lawyers at ESADE Law School. She is author of numerous articles about marketing and management in specialized press, blogger in Expansión.com and co-director of ‘the study of legal sector’ ESADE Law School (January 2011) and the Lawyer of the XXI century (2014). She recently has published her first book Legal Marketing (Ed. Tirant Lo Blanc)