Volume 18, Number 3
The Business of Law
The View from One Crystal Ball
With the millennium in full swing, it seems like a good time to look ahead and ponder the future of law practice. So, in no order of importance, here are five magic-wand predictions about how I see the future of the legal profession.
Law Will Become More of a Business
It's clear to me, and to the many others who are now finally talking about it, that law is both a profession and a business. Those remaining few who still believe that law is only a profession are finally being left behind.
As a profession, we care about people, and we help the people we care about. Like medical practitioners, lawyers are in direct contact with their clients, and those lawyers with few or no support staff who are in a sole and small firm context are even more on the firing line. This can be a definite advantage when you add in the business factor. Lawyers will try not just to help the client but also to find out what the client really wants. As any marketing person knows, satisfying the client or customer by addressing their problems, needs, wants, and expectations is a major hallmark of success.
Lawyers of the future will adopt the successful practices and methodologies of business and industry. Those methodologies include coaching, branding and market research, segmentation, and positioning.
Law Firms Will Continue to Change, Grow, and Evolve
Following the trend of law firms to mirror their clients by going through similar structural changes, e.g., merging and conglomeration, firms of the future will be going into more ancillary businesses. Of course, law firms have been doing this right along, in accordance with rules of professional conduct, by hiring a variety of professionals on staff. Family law practitioners hire accountants to provide related services. Elder law specialists work with financial planners and geriatric professionals to give a more complete, team approach to an elderly client's problems. And some law firms actually have invested in "ancillary" businesses. A recent law publication showing partner profits stated that a number of law firms' profits were undervalued because their investment profits had not been included.
And this process of increasing law firms' reach will be formalized in some form or another in the not-too-distant future when accounting firms and law firms combine. They're doing it now, unofficially and informally, but they will do it formally somewhere down the road. There is nothing to suggest that only accounting firms will acquire law firms. Although accountants began the process, large law firms could just as easily acquire accounting firms-when the rules of professional conduct change.
But a reverse trend will also occur. As clients break up into smaller components, or as divisions of major conglomerates act independently in the areas of their own market expertise, law firms will again mirror their clients. Clients at least will want to recognize the boutique and specialized practices for some of the more commoditized areas of law that will be ripe for sole and small firm practitioners. For example, one law firm recently created a separate division to provide repetitive, "commoditized" legal services that they could not otherwise deliver in a cost-effective way under the overhead structure of the law firm. The new division, using technological advances, could. The firm was able to retain the client (and gain new ones) by adding this specialized category.
So I don't see small or mid-sized law firms going away. Their market position will be vital, although there may be more economic pressures on them. I see smaller profits per lawyer because law practices will become more commoditized.
More Law Firms Will Be Bought and Sold
More and more states will permit the sale and purchase of a law practice. (More than two dozen states currently allow this, having made changes in their rules of professional conduct or ethics opinions.)
Using the old example of television's Dr. Kildare moving in and taking over the practice of the retiring doctor, more lawyers will buy (and sell) ongoing practices. There are just too many advantages to stop this trend for lawyers who want to move to another practice as a lateral partner; who are ready to retire or just ready to change careers; or who are young associates or new lawyers and want to jump-start their own firms by purchasing an existing practice. The economic advantages to lawyers are obvious. And there are advantages as well to clients, who will have continuous representation. Of course, the rules of professional conduct enable the client to take its matters to another lawyer, but the strong preference will be to stay with the new lawyer who is recommended by the outgoing lawyer they already trust.
Lawyers are beginning to realize that they have something of value (goodwill), and that their practices don't need to die with their retirement or their death. An established practice is something of value that can actually be transferred from one lawyer to another.
Lawyers Will Once Again Be Societal LeadersIn previous periods, lawyers were the leaders and visionaries of our country. Many lawyers and legally trained patriots were the writers of our Declaration of Independence and Constitution. Today, there are far fewer lawyers who truly are leaders. The number and percentage of lawyers who are legislators is significantly lower than in earlier years.
And lawyers used to be "general counsel" to clients. It was the lawyer to whom a client first turned for advice. And if the lawyer was not the appropriate person to deal with the matter, he or she would make a referral to another professional and stay involved as the client's general counsel. Today, lawyers tend to be specialists who lack the general knowledge required to lead a team of professionals for the client. But there is a shift occurring. Clients are turning more to those lawyers who have this general knowledge. The trend of "general" representation has already begun.
Leadership should be taught in law schools; unfortunately, it is not. The lawyers who are pushed out of law school doors in increasing numbers are bright, educated people, but they haven't really learned anything about practice management or ethics. Law schools merely give them the skills to be combatants. They're good army men and women, but they're not good leaders or general counsel.
Maybe it's wishful thinking, but I'm hoping for more leadership from tomorrow's lawyers and greater emphasis on the concept of "general counsel" and preventive law.
Bar Associations Will Reinvent Themselves
Local, voluntary bar associations are seen by most large law firms as mainly irrelevant today. That's why large firms no longer support the bar, which, in their eyes, merely comes up with more restrictive ways to practice law, and new ethical provisions that do not reflect current economic realities. The bar does not reflect the interests of the lawyer; it reflects the interests of the small consumer, not even the large corporate consumer. The large law firms no longer can look to the bar as their champion.
And what of the sole and small firm practitioners? They frequently find that dues structures and time requirements are too great to remain active. That's why bar membership numbers are, at best, static and, in most circumstances, declining.
Progressive bar associations are looking for ways to reinvent themselves and to make themselves more relevant to today's lawyer. It will be a challenging task, and one I hope they succeed in accomplishing. There currently is no other voice for lawyers; the bar, both local and national, has a place in our time. But it has to be seen by lawyers as protecting their interests also. Providing mandatory continuing legal education-the source of much of its non-dues revenue-is insufficient reason to support the bar.
Edward Poll, J.D., M.B.A., CMC, is a certified management consultant in Los Angeles who advises attorneys and law firms on how to be more profitable. He is the author of The Profitable Law Office Handbook: Attorney's Guide to Successful Business Planning. He can be reached via e-mail at email@example.com