LegalBusinessWorld Posts

Law firms are doomed. But does anyone care?

July 17, 2018

As a company who serves as the interface between the supply and demand side of the legal industry, we spend a bunch of time trying to understand the various stakeholders.

 

What’s becoming more obvious to me, is that the traditional law firm, as it stands in its current form is under real threat. 

 

What’s also becoming obvious, is that no one really seems to care. Perceived as expensive, awkward to deal with, and built on frameworks that incentivises the exploitation of uncertainty, it is inevitable that people with legal problems seek more predictable solution. These alternatives are appearing in droves. At the bottom end, “access to justice” initiatives are getting real traction, and at the top end in-house departments are going all in on “Legal Ops” and transforming from cost centre, to the value adding, centres of excellence, that are becoming more efficient and less reliant on outside counsel. 

 

Law firms are slowly but surely losing market share. 

 

And the world is indifferent. It feels like someone should care, but when you unpack the stakeholder stack, it’s hard to find a persona that will bring the kind of resourcefulness and desperation that a founding CEO, or investor would traditionally bring to the table in other industries facing the same challenges. 

Below we take a look (full of sweeping generalizations) at the various stakeholders and the reasons why they don’t care that law firms are disintegrating:

 

Clients

Clients are obviously just looking for one thing. They want their problems to go away. When divorcees can ask Alexa to file for custody of the kids, and trust the results, they will. If companies can engineer policies to keep them from getting into legal strife in the first place, or automate solutions, they will, and are. 

 

The key point here is that when legal issues arise people aren’t thinking, “oh no I have a legal issue”, instead the first thought is, “on no I need to contact my lawyer at ABC law firm”. Old law is often seen as the problem, not the solution.

 

Law societies and Bar Associations

These organisations hold all the cards in terms of shifting incentives (e.g. allowing partners to become shareholders with an enduring interest in an appreciating asset) but they care primarily about protecting the integrity of the practice of law, and its effect on the consumers of legal services. They are in theory indifferent to the way practitioners organise themselves, or to existential threats to the industry.

 

Staff and staff solicitors 

Sure, these guys care, at times more than the partnership (ask any practice manager or non-lawyer CEO of a firm how they’d fix things – you’ll usually get an inspired answer) but there is a fundamental difference between “naww… I loved working at ABC and co” caring, and “I would die to fix the inherent problems in the traditional law firm model!!!” kind of caring. Regardless, this persona is in effect powerless, much like the labour force in any other industry.

 

Importantly, there will always be a need for this persona. The world will always need lawyers, and lawyers will always need support staff, but does this labour force really care about the structure of the organisations within which they are deployed? Probably not. I’d say that life in an in-house legal team, LPO or and boutique firm would be perfectly acceptable and potentially preferable to the conditions in many firms today.

 

Partnerships

Here’s the thing. Law firm partners come to the table knowing that this is a temporary gig. They don’t ‘own’ anything. They’ve simply earned, and paid for the right to claim a percentage of the profit for as long as they keep their seat. 

 

“Make hay while the sun shines!”. Get that PPP up, take regular drawings and plan for a vibrant retirement. This mindset is key and seems to be behind the indifference shown by many in the face of clear and present threats to the industry. “When my times up, my times up”. The end could come in the form of a drunken Christmas party mistake, losing a key client, being usurped, or if you’re lucky, retirement. Either way, the connection most partners have to the firms they are custodians of, is tenuous.

 

So when someone says a firm won’t be here in 5, 10 or 20 years? So what. Even if partners haven’t reached retirement age by then, there’s always another firm, the bar, investments, directorships… you get the picture.

 

So if above is remotely accurate, the obvious next question is, “how do you fix the model so that partners do care?”. 

 

I alluded to this earlier – I think that the only way to save the law firm model is by changing ownership structure, but so does everyone else. And I think a better question is “do we need to fix the model?”.

 

If the ultimate end game is improving access to and quality of legal services, then do law firms in their current state need to be saved or is this just Darwinism in full effect? 

 

Is the partnership model the evolutionary equivalent to Neanderthal man, destined to be disrupted into oblivion, and in doing so take with it decades of decay, toxic practices, and ill feeling? Probably. But then again, who cares?

 

About the author
Tim Boyne is co-founder and COO at LawVu, a cloud-based matter management platform for corporate legal departments. With an IT and operations background in law firms, Tim and his team are "productizing" much of what they've learned working with service providers to empower corporate legal teams.

 

 

 

 

 

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