A number of firms, mostly smaller firms, are changing billing models from the traditional billable hour to fixed fees and retainers (I’ve implemented that change in this firm and the billable hour has become the exception for those clients who prefer it) and even their operating structures which, in come cases, are becoming more virtual with lawyers spread over distances collaborating remotely using online tools.
While these changes are important, they feel a little like innovations in gas lighting right before the electric light finally overtakes gas lighting and renders it redundant. Of course law firms still charging by the hour and working the way they have worked for the last few decades are going to retain a degree of support but are fast become anachronisms and symbols of what is wrong with legal practice.
Jordan Furlong published a post with his thoughts about how legal practice could change in his post titled “The electric law firm” (the title appeals to me, I love this sort of retro contrast between old tech and new innovations). One of the models he talks about involves lawyers giving away some of the work we traditionally charge for and shifting the emphasis to other aspects of our services:
So how might a law firm give away products while selling services? Jeff Carr has observed that lawyer work falls into four categories: content, process, judgment and advocacy. The first two are well on their way to commoditization; the latter two remain the high-value and near-irreplaceable purview of lawyers. The day might soon arrive when firms publish and automate their legal knowledge, document assembly and document review process free of charge, over the internet, to anyone who wants them – but will charge a monthly retainer fee for the personal judgment, advice and representation that animates those documents and processes and provides real value. Wilson Sonsini’s term sheet generator is a step in this direction, but so are child support calculators and PCT calculators. The tangible product is the giveaway; the value, and the profit, are in the service.
A fair portion of my firm’s fee income is derived from custom documents that we create for our clients. At the same time there is a variety of online resources that threaten this source of income, perhaps rightly so. I still believe that there is value in documents that are designed to cater for specific needs but a fair proportion of documents lawyers prepare for their clients are probably pretty similar and could be adequately created using good templates and well designed document creation tools.
What remains is what has been at the core of the legal profession since it first began: knowledge and skill. I believe that what clients ultimately want from their lawyers is the benefit of their expertise. Frequently that is expressed through a document of some kind but if you take away the document creation side as the dominant expression of legal expertise you are left with, well, the expertise itself.
This reminds me about that old tale (apologies in advance for my mutilation of this classic story) of the plant manager whose production line grinds to a halt due to some fault his best engineers can’t identify or repair so he calls a specialist engineer. The specialist walks in with his toolkit and spends the next hour or so poking around, crawling into tight spaces and eventually emerges, walks up to his toolkit and takes out a hammer. He walks up to a section of piping, gives it a solid whack and starts up the production line. The plant manager thanks the specialist who leaves. A few days later the plant manager receives a bill for R10 000 (you know, some seemingly exhorbitant figure). The plant manager calls the specialist, outraged, and asks him how he could possibly charge so much for a whack of his hammer. The specialist calmly replies that the hammer whack cost R10 but knowing where to whack the hammer cost R9 990.
This story comes to mind whenever I come across a client expressing dismay at the cost of a particular document or service in light of the freely available resources online (for example). The document is one small part of the process. A much bigger part is knowing which document to use and which customisations to incorporate into that document. The same principle applies with legal advice, dispute resolution and so on.
Whatever form legal practice will take in the near future, the emphasis must be more on knowledge and skill than on widgets. I have my doubts whether large firms are nimble enough to keep up with the pace of innovation taking place in smaller firms but the profession will change, eventually.