Some New Year’s Resolutions for the Business of Law

Topics: Business Development & Marketing Blog Posts, Law Firm Profitability, Law Firms

The end of the year is the traditional time to take stock of where we are and to make resolutions for the year ahead. Here are some thoughts and resolutions for the business of law as we head into 2016:

Taking Stock

I have two observations on where we are.

First, our system for serving clients is incredibly deep and effective. It enables commerce to flourish, it supports justice for our citizens, and it is populated by a profoundly talented, experienced and principled set of lawyers and legal service professionals, who are dedicated to achieving the best outcomes for their clients.

Second, the demands on our system are putting strains on its ability to achieve its full potential. With ever more law, more risk and more data, the need for legal service is expanding exponentially. Meanwhile, a combination of antiquated business and regulatory models cause legal service to be more expensive than it needs to be, to be inadequately available to many of those who need it, and, paradoxically, to make it hard for many who are attracted to a career in law to make a go of it.

A great system, that serves us well, but one that could serve us better.

Resolutions

Countless individuals and organizations make up our legal ecosystem. As I am fond of saying: “We are all in this together.” Each of us in law depends on that ecosystem in one way or another, and each of us has responsibilities to contribute to its vitality.

Here are suggested resolutions for seven participants in law for 2016:

Leading Law Firms: Use Your Market Leadership to Optimize Client Service

The AmLaw 200 and other leading law firms have commanding market positions. They should resolve in 2016 to use their market leadership by taking bold action to adapt their models to optimize client service (in ways I suggested earlier this year). The idea here is not simply to be competitive; it is to lead. Chart a better path. You are in a position to do it. You should.

Up and Coming Law Firms: Go for it!

For every market-leading firm, there are some number of other firms that aspire to out-compete it. This coming year, they should resolve to go for it. The overall market is immense and growing; opportunities abound for those who harness design concepts and technology, and encourage lawyers looking for rewarding careers. Don’t be intimidated by the lead of the incumbents. Build something new for the 21st century.

New Entrants: Go for it!

Here I address the rapidly expanding participants in the legal service ecosystem who do not engage in “the practice of law,” but provide support to those who do, such as legal process outsourcers, process management systems firms, data analytics firms, flexible staffing firms, and so on. They, too, should resolve to go for it. The times are ideal for experimentation in ways of organizing client service better, faster and cheaper. Legal service providers have an increasing appetite for help; and the law permits sensible capital raising techniques, to boot.

Law Schools: Take Stock of Your Outcomes

Our system relies on law schools to train future lawyers and, to some extent, the people who will manage and staff other legal service providers. However, things are not going well in legal education: graduates are having an increasingly difficult time connecting with rewarding careers and applications are plummeting. Law schools should resolve to apply the same level of rigor they employ in research and analysis to take stock of what is causing such disappointing outcomes for their students. The market needs good lawyers more than ever. Why are the law schools not meeting that demand?

Regulators: Open It Up

State regulators are the gatekeepers who control the supply of lawyers and other professionals to meet the market’s demand for legal service. They set the standards for the law schools, they license the lawyers, they determine the tolerance for other professionals to do elements of the work involved in legal service, and they limit access to capital for law firms. They should resolve to open up the system in 2016. The traditional standards are unduly restrictive, embedding significant, unnecessary cost into the system, and denying law firms a fundamental financial tool for building better systems.

Investors: Go for It!

The legal services market in the United States is immense, approximating $437 billion annually, not counting internal government and non-governmental organization (NGO) expenditures. While the rules currently prohibit investment in law firms, outside capital is welcome in the “new entrant” category. Investors should resolve to actively examine investments in law in 2016. I believe we are approaching an inflection point in the adoption of the services that the new entrants are offering to the law firms, law departments and each other. It is a good time to get in, And the more money that enters the market the faster and more effective the advances in legal service will be.

Happy New Year!!