Volume 18, Number 1
The Language of Change
By Jerry Lawson
Failing to keep up with the latest jargon can lead to embarrassment. I was dramatically reminded of this while moderating a panel at an ABA conference in Chicago on new methods of delivering legal services.
One of the panelists was Richard Cohen, the co-founder of Desktop Lawyer, a British business that sells custom-drafted legal documents through the Internet. Users have the option to contact lawyers through the site for an additional fee, but the Desktop Lawyer software works so well that few users feel any need to do so. Just a few months after its introduction, Desktop Lawyer captured a significant percentage of the market for divorces in the United Kingdom.
Before the program, Mr. Cohen told me he planned to talk about "The Commoditization of Legal Services in the United Kingdom." In an effort to be helpful, I suggested that he reconsider his phrasing: "The word 'commodity' may not have the same connotation in England, but here it has derogatory overtones. Talking about 'commoditizing the law' may offend some lawyers in the audience."
Mr. Cohen said nothing. I again tried to help the poor foreigner, who appeared to be having some problems with the subtleties of the American language: "You see, in this country commodities are cheap. You can't charge high fees for something that is a commodity." Again, Mr. Cohen said nothing. After a few seconds of trying to figure out why his gaze seemed to be filled with pity for his dim American cousin, I finally got the point: He wants it cheap. That's how he's going to make money.
The American Lawyer Media article about the conference bore the headline "Technology From Hell Challenges Lawyers, Scares ABA." The Industry Standard, a trade paper for the Internet industry, observed that the new technology would "undermine the profession by positioning traditional lawyers as overpriced and expendable." Make up your own mind: The Chicago-Kent College of Law has placed videos of the entire conference, including Mr. Cohen's segment, at its website (www.kentlaw.edu/clc/tech2000/).
Since the conference, Mr. Cohen, who appeared to be motivated at least as much by an idealistic desire to drastically lower the cost of high quality legal services as a desire to become wealthy, has licensed his software to at least one U.S. business. He and a host of others like him are deploying technology that could significantly affect many lawyers.
It is a mistake to underestimate the implications of new technology, especially its probable economic and social effects. Here is a sampler of the more significant new Internet developments, along with suggestions as to what they are likely to mean for lawyers:
- B2B. "Business to Business" transactions, as opposed to business to consumer transactions. Many businesses are finding it advantageous to deal with other suppliers, in some cases including professional services providers, via the Internet.
- Broadband. Very high speed Internet connections, such as those delivered by TV cable connections, or the new telephone technology known as digital subscriber lines, or DSL. Broadband connections are not just faster but also are typically always available instantly. (See Nailed Up). These technologies are important because they make using the Internet qualitatively different. Applications that are impractical, or only marginally feasible over slow dial-up phone connections, such as full-motion video, become practical with broadband.
- Convergence. The trend of having multipurpose appliances that include Internet features. This is already common with high-end PDAs (personal digital assistants) such as Palm devices and cell phones, but these are only the beginning. Internet-capable televisions are on the way. 3Com sells a kitchen device called Audrey for about $500 that has an eight-inch touch screen, e-mail access, a calendar, an address book, and a knob for dialing among preset websites. Convergence is important for lawyers because it contributes to the ubiquity of the Internet, which will probably become the world's most important communications medium in a few years, if it is not already.
- Digital Signature. A method of using mathematical formulas built into software to prove who sent a computerized message, and to verify that the message has not been altered in transit. The recent federal "E-SIGN" bill (Electronic Signatures in Global and National Commerce) provides that electronic authentication methods (including digital signatures) are not to be denied legal effect just because they do not use paper. The ABA website has a digital signature tutorial (www.abanet.org/scitech/ec/isc/dsg-tutorial.html). Digital signatures and the related concept of encryption (scrambling information so it can only be read by authorized persons) are critical to doing business on the Internet. These ideas are important to lawyers, because as they become more widely understood by the public, they will reduce consumer fears, which are presently a leading barrier to expanded use of the Internet for buying goods and services, including legal services.
- Disintermediation. Cutting out the middleman. A striking Internet phenomenon, as illustrated by the many stockbrokers, travel agents, and insurance brokers who have been displaced by Internet-based competitors. Some analysts believe that as use of the Internet becomes even more common and consumers become more sophisticated, lawyers in certain areas of practice may also be vulnerable to disintermediation.
- Dot-Com. Trendy name for any Internet-based business.
- eLawyering. Alternative name for an ABA program called "Lawyers Helping Society Through Techno-logy," intended to help lawyers use technology to provide better services to middle- and low-income Americans, and in the process, defend themselves from competition from other legal service providers using the Internet. The project has a website (www.elawyering.org).
- Frictionless. Refers to the fact that the Internet reduces transaction costs. Radically lower overhead makes new business models possible. For example, the Internet makes practical many class actions that were previously infeasible. The idea of a "frictionless economy" and its consequences is derived from the work of the Nobel Prize-winning economist Ronald Coase. This is explained in more detail in a number of books, with Unleashing the Killer App: Digital Strategies for Market Dominance by Larry Downes et al. (Harvard Business School Press, 1998) being one of the more accessible.
- Gravity. Traditional attitudes and other factors that make it difficult for older businesses to compete on the Internet.
- Infomediary. While the Internet eliminates some traditional middlemen, it also makes new niches possible. "Information intermediaries" use the Internet to gain the trust of consumers, and then serve as intermediaries between consumers and vendors of products and services. This concept is developed in John Hagel and Marc Singer, Net Worth (Harvard Business School Press, 1999). Many Internet businesses are trying to turn themselves into intermediaries, helping consumers find qualified lawyers at their price point. Because traditional lawyer referral services generally do not use the Internet effectively (if they use it at all), an increasing number of consumers find them less convenient than newer alternatives. The fact that traditional referral services often operate as mere client funneling mechanisms, providing little value to consumers, makes them even more vulnerable to new competition that is more convenient and provides more information and other types of assistance to those seeking to hire a lawyer. This is a good illustration of a common theme: It is a mistake to assume that services delivered via the Internet must be inferior. They often will be of higher quality. Even when the Internet version is not objectively superior, consumers may find it preferable. (See Sub-optimization.)
- "Information Wants to Be Free." Slogan that is sometimes dismissed as a sort of hippie political manifesto. While some people use the phrase with that sort of meaning in mind, it is better understood as a statement of economic principle: Because the Internet reduces the marginal cost of copying and distributing many types of information to practically zero, many businesses will find it profitable to give away large amounts of information that was previously sold, using free information as a giveaway to attract attention. (See Mindshare.)
- Internet Appliance. A device that is not as powerful as computers commonly in use, but that is able to access the Internet. Sometimes referred to as an Internet terminal. Boosters of the concept sometimes say their objective is to make using the Internet "as simple as using a toaster." WebTV, which uses a regular television set for a monitor, was among the first to be successful. A flood of competitors such as Netpliance's I-opener ($299) and the New Internet Computer ($200, backed by Larry Ellison of Oracle) are providing attractive alternatives for those seeking simple, inexpensive Internet access. International Data Corporation estimates annual U.S. sales of Internet appliances will climb from 220,000 in 2000 to 4.3 million in 2004. Fidelity Investments already has gone so far as to give selected customers IBM-built terminals for managing their financial portfolios. As the price of Internet appliances continues to fall, they will only become more attractive to consumers. This trend will help make Internet access ubiquitous, making it the primary method by which many, if not most, consumers seek access to a variety of goods and services, including legal services.
- Intranet. A private Internet site, used to facilitate the internal operations of an organization. Extranets are similar, but they are opened up to selected outsiders, such as clients. Providing valuable services to clients through intranets and extranets is a way of making yourself "sticky."
- Latent Market for Legal Services. An idea popularized by Richard Susskind in his book The Future of Law (Oxford University Press 1996). Susskind's basic observation is that many consumers who could benefit by hiring a lawyer, and have the money to hire a lawyer, fail to do so for various reasons, including inconvenience, high fees, and fear of high fees. Studies of U.S. consumers confirm Susskind's theory. Many Internet legal service providers are targeting this market initially. A goal of the ABA's eLawyering project is to help traditional lawyers serve this market more effectively.
- Mindshare. Public awareness. The overhead for distributing information on the Internet is so low that it is becoming a standard practice for businesses to give away information there that was traditionally sold. A new Lexis website, www.lexisone.com, is a good example. The company gives away a volume of free material that would have been unthinkable before the rise of the Internet, solely to attract attention to its other products. This trend is cause for concern because many lawyers make a good portion of their income through aggregating information and selling it.
- Nailed Up. An Internet connection that is always "on," so that users always have instant Internet access when their computer is turned on, rather than the slight delay that is typical of most modem dial-up accounts. Cable modems and high capacity DSL (digital subscriber lines) are two popular methods that are affordable for home use. Dial-up account users who switch to a "nailed up" connection may notice dramatic changes in Internet access patterns. When it takes only a second or two to access the Internet, instead of a minute or so, it frequently becomes more convenient to find answers on the Internet than to use a paper reference book that is near your desk. Consumers with nailed up connections will eventually find it easier and more attractive to locate and choose a lawyer through the Internet than through traditional means such as the Yellow Pages.
- Narrowcasting. Tailoring a marketing message to a narrow audience, instead of "broadcasting" in search of a broad audience. The Internet frequently makes this an attractive strategy because it reduces the overhead involved in distributing a message, and makes it easier to target a message toward a particular audience. Instead of positioning itself only as a general purpose law firm, or even a personal injury firm, a law firm could slant its marketing, or part of its marketing, toward particular types of cases. For example, one Texas lawyer interested in a narrowcasting strategy registered the domain name (used in a website address, or URL) firestone-litigation.com, and 40 related domain names.
- Portal. A website that tries to attract large numbers of users to select it as their preferred entry point. Many of the major search engines, such as Excite (www.excite.com), have tried to become portals by adding directories, free e-mail, maps, discussion groups around various themes, and other features. (See Vertical Portal.)
- Sticky. The quality of a website that makes it inconvenient for users to stop visiting it. For example, websites that provide free e-mail may encourage users to store address book data on the Web, because of the investment of time necessary to recreate this information on another site. The most effective law firm websites will find ways to make themselves sticky.
- Sub-optimization. Settling for less than the highest quality product or service available. The Internet frequently makes this attractive for consumers. For example, the Washington Post's Legi-Slate congressional information service was widely respected for its high quality, but it recently went out of business. Sub-optimization is believed to have been one key contributing factor: many consumers elected to save money by using free Internet sites instead of paying expensive fees. Some analysts believe that sub-optimization will result in many consumers of legal services opting to purchase legal services through one of many Internet sites such as Arthur Miller's Americounsel.com (www. americounsel.com) or U.S. Law (www.uslaw.com), instead of retaining conventional law firms.
- Unbundling. Sometimes known as "discrete task representation." Giving clients the option to purchase specific services, without necessarily requiring them to enter into a full attorney- client relationship. The Internet makes unbundling more attractive as a business model. ABA Model Rule of Professional Conduct 1.2(c) provides: "A lawyer may limit the objectives of the representation if the client consents after consultation."
- Vertical Portal. A portal targeted at a particular industry or interest group. Sometimes called a "vortal." Findlaw (www.findlaw.com) tries to be the premier vertical portal for the legal profession.
- Virtual Community. A group of people with a shared interest who communicate via the Internet. Can be used to market many things, including legal services, in a variety of ways. Prairielaw (www.prairielaw.com) is a leading example. John Hagel and Arthur G. Armstrong's book, Net Gain (Harvard Business School Press, 1997), does a good job of explaining the underlying theoretical ideas.
Winners and Losers
When Internet stock prices were at stratospheric levels, I used to get a lot of requests for investment advice. I never provided any suggestions, always declining with the same explanation: "It is easy to see that the Internet will cause enormous changes in our economy, but predicting exactly which companies will benefit the most is a different story."
As I write, technology stock prices have a lot less "irrational exuberance" than they did a few months ago. One thing has not changed: The Internet will still revolutionize our economy in the long range. Over the next decade or two, the Internet and related technologies will make some people big winners and some people big losers. Lawyers will be found in both groups.
The Desktop Lawyer software is only one of many technology-driven challenges that the legal profession will face over the next decade. In my view, other new technologies and business models, some of which are hinted at in the definitions above, will probably be even more serious challenges in the long run. Lawyers who do not understand what is happening or why will be poorly equipped to thrive in this new environment. Lawyers who do understand and adapt will stand to come out ahead. Which side you plan to be on?
Jerry Lawson is a practicing lawyer in Washington, D.C., and the author of The Complete Internet Handbook for Lawyers (ABA Law Practice Management Section, 1999). The book's "online pocket part" is at www.lawyernetbook.com.
Other Sources of Definitions
New technical developments are coming along all the time. Many more definitions are readily available online:
- Webopedia (www.webopedia.com)
- Tech Web (www.techweb.com/encyclopedia/)
- Basic Internet Terms for Newbies (www.jworkman.com/)