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Competition will define the future of law practice. Getting ahead of the pack will require difference, not sameness. Think innovation, not precedent.
There’s a lot of speculation these days about a “new business model” for law firms. It tends to come up immediately after discussions of whether the recession will cause permanent damage and leads straight into the inevitable question, “Will the new model be a modified pyramid, a box, a diamond, another kind of shape or what?”
In the main, though, all the “new model” language is really just worried shorthand for this: “Oh, my gosh, what next?!?” But the assumption that any possible future might produce a single new shape to which we’ll all re-conform is one that ought to make the forward-thinking prickle. Frankly, let’s just say right now that what happens to law firms in the future is going to be a whole lot more complex than just a simple tweak to the old pyramid leverage scheme. The future of the business of law is going to be about difference, not sameness. About innovation, not precedent.
Take a look around you. Lawyers are busting out of the norm all over the place—and going in a lot of new directions while they’re doing it. The smart ones are skipping the conversation about what everyone else is going to do and pursuing some very unique business propositions. These folks aren’t interested in “the next best thing.” They’re interested in being at the head of the pack.
There’s a lot of radical stuff going on in the business world of legal services, but the most significant and certain-to-be-long-lived specter driving change is competition. Face it, there are way too many lawyers for the shrinking universe of clients who are willing to pay what those lawyers want to earn. And as if that wasn’t enough, new technologies are redefining—or, in some cases, eliminating the need for—the very work that you do.
Competition can be a wonderful, exhilarating thing to those who understand how to compete in this world. For those who don’t, or just choose not to, things could get very dicey in the coming years. And that’s why—instead of twiddling their thumbs and trying to figure out how to tweak the pyramid—some enterprising lawyers are busy reinventing themselves and the way they practice. Shouldn’t that be you, too? There are countless new business models to employ in the legal profession’s future. The following pages outline just a few possibilities for your consideration. The only limits will be your imagination and willingness to take risks.
Let’s get started!
THE VIRTUAL FIRM
What You’re Selling: Typical legal services at a better price.
Who you’re selling it to: Traditional clients for legal services, other lawyers and firms.
Money-making proposition: You don’t have to pay overhead for a central office or full-time staff. There are plenty of clients who don’t care where your office is and never come there, anyway. A good number of excellent lawyers have lost interest in the commute, the bureaucracy and the pressure in the office. Lawyers can practice on the run, on-site at the client’s or from home, connecting with peers and clients electronically and sharing files in the cloud. Once past the initial investment necessary to set up each one-person office, there is little overhead, so rates will be more than competitive. Life-balance benefits are good as well.
Competitive edge: Less-expensive services. High-quality performance from lawyers interested in a different and more flexible work environment.
What you need: State-of-the-art technology to support effective connection and collaboration. Good lawyers with strong online communications skills. Clients with a similar level of comfort and relatively low need for personal contact.
Challenges: Avoiding feelings of isolation. Building and maintaining relationships with little face-to-face time. Structuring ways to continue interaction and professional development with peers. Staying on top of time management.
Of note: Gen-Xers thrive on independence and self-sufficiency.
Fun possibility: Is Twitter the glue that binds a firm like this?
The Retail Firm
What You’re Selling: Off-the-rack legal solutions with options for custom-tailoring.
Who you’re selling it to: Individual consumers and small organizations.
Money-making proposition: People and companies will buy prepackaged legal solutions if they’re sure of the quality, comfortable with the experience, and convinced that the people they want to be like do it this way. Simple contracts, wills, divorces, pre-nups and other agreements can be packaged and sold via kiosk, storefront or online, if they come with a convenient option for personalization and advice. Such standardizing will create high profit margins. Package sales will feed work to individual lawyers when tailoring is necessary.
Competitive edge: Simple and easy access to DIY legal solutions backed by the security of custom-tailoring when needed. Inexpensive, understandable and quick.
What you need: High-quality standard forms with strong non-lawyerese instructions. Paralegals or others to staff outlets and perform triage to determine where additional lawyer assistance is required. A few experienced lawyers on call for more sophisticated counsel. Existing wisdom required. (This is not on-the-job training time.)
Challenges: Initial advertising investment could be high to market the brand and create a consistent retail experience. Also need to avoid mountains of disclaimers while protecting yourself.
Of note: Eliminates barriers to access for many consumers. Gives Gen-Xer clients the independence they like. And baby boomers easing out of full-time practice will be attracted to the prospect of keeping a hand in by providing higher-level advice (when tailoring is required).
Fun possibility: Design whimsical displays for your storefront windows.
THE LEGAL LINE
What You’re Selling: Quick answers to questions like “Can I get a divorce without paying a lawyer?”
Who you’re selling it to: Individual consumers.
Money-making proposition: People will pay a small fee to avoid having to do lengthy research to determine their legal options. You bill single charges per incident paid via credit card or PayPal.
Competitive edge: Easy access to service that has been largely unavailable to the public. Eliminates barrier to entry, along with fear of high lawyer’s fees.
What you need: Great technology. A solid mechanism for dealing with liability and conflicts.
Challenges: Avoiding overpromising. Clarifying about whether a call or online exchange initiates “legal representation” or merely “access to information and referral.”
Of note: Since similar information is frequently offered free of charge by not-for-profit entities, serious consideration must be given to adding value. Perhaps this combines well with another model like The Retail Model.
Fun possibility: Work the Web or the phones while wearing your bunny slippers.
THE TEACHING HOSPITAL FIRM
What You’re Selling: Top-drawer legal services and elite on-the-job training.
Who you’re selling it to: Clients who require the highest expertise for their legal services. Also young lawyers fresh out of law school (or the law firms who want to hire them) who seek the best available on-the-job training in specialized areas of the law.
Money-making proposition: This is the “Johns Hopkins” of law firms. In 1873, Johns Hopkins revolutionized medicine in the U.S. when he bequeathed his fortune to create a combined hospital and university where the practice of medicine would be wedded to medical research and medical education. Using this model, accomplished and experienced lawyers will (1) practice law, (2) use their work with clients to teach younger lawyers who are in an apprentice capacity and (3) lead research in evolving areas of the law. The clients pay well for prestigious and specialized legal services. The young lawyers or their firms pay tuition for training.
Competitive edge: Absolutely, unequivocally the best in both services and training. Learning in the “teaching hospital” firm is like getting a Ph.D.
What you need: Experienced lawyers of the highest character and greatest skill willing to both practice and teach. A strong relationship with a respected law school.
Challenges: Having visionary and persuasive leadership required to overcome the fear of an unprecedented model.
Of note: The traditional law firm talent model no longer works, thus this is a huge business opportunity for a smart someone.
Fun possibility: Doing good while doing well, with pro bono programs that teach lawyers and reach the truly needy, your way. Lawyers will be seen having fun on TV in the legal version of “Scrubs.”
THE FIRM’S FIRM
What You’re Selling: “Shovel-ready manpower,” backroom legal services.
Who you’re selling it to: Other law firms, legal departments and individual lawyers who need support for research, drafting, forms, depositions, discovery and similar commodity services.
Money-making proposition: Some law firms, tired of the expense and frustration of employing churning armies of associates, will get out of that game partially or totally and outsource to experienced lawyers the work that would ordinarily be handled by junior associates. Why can’t that be your firm providing the services? Services could be priced on an hourly rate, flat fee, retainer or custom-package basis. Lawyers and paralegals in your firm will be salaried with great employee benefits but no promise (or threat) of partnership.
Competitive edge: Other firms and senior lawyers want to get out of the business of managing people and back into the traditional practice of law. They provide the expertise to their clients, you provide them with the manpower.
What you need: Talented and hardworking lawyers and paralegals of all ages and seniority levels who are interested in doing good work with predictable compensation and hours without the partnership derby.
Challenges: Negotiating liability and conflicts systems. Building compensation systems that motivate differently. Training senior “client managers” to mind relationships with your clients as well as project managers to supervise those who do the work in your firm on clients’ behalf.
Of note: Fewer and fewer lawyers are interested in the associate-to-partner horse race. Flexible hours are more possible when “face time” ceases to be important. This business model already exists in other professional services arenas.
Fun possibility: Neutralize hierarchy issues—and have holiday parties that everyone wants to attend.
THE DRIVE-UP MEDIATION FIRM
What You’re Selling: Quick an easy resolution of simple conflicts.
Who you’re selling it to: Individual consumers and small businesses.
Money-making proposition: People will pay for an end to conflict in their lives if the parameters are clearly stated and both parties agree that resolution is desired. Some very wise and experienced lawyers are approaching retirement age while their skills and capabilities are still at their peak. These lawyers can be strong mediators, and start out with the respect of all parties necessary for success. Storefront and mall locations with private and comfortable “agreement spaces” will make conflict resolution no more complicated than a trip to H&R Block at tax time. Additional option: Offer inter-employee conflict resolution services to large corporations. You can charge flat rate or hourly for the mediator’s time.
Competitive edge: In this setting, conflicts are normalized and managed in a way that best serves any other business or personal complication, i.e., there are professionals who can help out. Disintermediation of the process –eliminating the traditional law firm interaction, etc.–makes it swift and cost-effective.
What you need: Strong up-front marketing. A well-defined process for pre- and post-conflict activity. Seasoned lawyers trained in mediation techniques. Superb materials that manage expectations clearly.
Challenges: Familiarizing your market with the concept and normalizing the methods.
Of note: Those in the millennial generation who grew up with “helicopter parents” are not only averse to conflict, they also haven’t a clue how to handle it. These guys are going to need help.
Fun possibility: A new mobile app that quickly defines the issues for both sides before they arrive on-site.
THE DIY FIRM
Your firm name here
Get out your pencil and apply some radical thinking to the form here. You may surprise yourself. Heck, you may surprise the rest of the world.
What you’re selling:
Who you’re selling it to:
What you need:
The Start of Something Big?
A few of the foregoing models likely look more outrageous than others. But then again, some lawyers are more outrageous than others—and some are already testing the ideas and possibilities raised here and elsewhere in this issue. (See Steve Taylor’s article, “Tomorrow: A Sneak Preview,” in this issue for examples of those already in the race.) Still in doubt? Just keep in mind that the concept of the Internet was pretty outrageous 30 years ago, too.
For so very long, the business of practicing law has been tradition rich but hidebound. Even those few who were willing to look on their practices as a business still mostly limited their management thinking to making absolutely sure they were running in the (safe) middle of the pack. Well, there’s no longer safety to be found there. You’re either stepping up to lead the pack or eating someone else’s dust.
Admittedly, the past couple of years have been tough. But don’t look for things to ever return to where they were in 2007. The latest economic downturn has pushed onto the profession what it’s been straining to avoid for decades—real fundamental change. It isn’t clear yet which will be more painful, the penny-pinching of the past year or the gut-wrenching changes of the next decade. But with a little unprecedented thinking and some openness to risk taking, these tough times could actually be the start of something big.
Merrilyn Astin Tarlton , principal of the law firm consultancy Astin Tarlton, believes there are few business problems that cannot by solved with the combination of desire, imagination and energy. A Past-President of the College of Law Practice Management, she is a Legal Marketing Association Hall of Famer and Editor Emeritus of Law Practice magazine