The Legal Industry got hit hard during the economic downturn in the US making it a less attractive path for would be lawyers. Nearly all law schools, except Harvard, received fewer enrollments. Nevertheless, in Law, a $300 billion industry and the second largest professional services sector, has become a great place for entrepreneurs.
Here are a few trends we can expect to continue as enterprising entrepreneurs continue to make their mark in law:
Start-ups Will Continue to Drive Down the Cost of Standard Legal Matters: As a former practicing lawyer, I’m well aware that no two legal matters are exactly the same. That said, there are a host of start-ups offering consumers ‘Do-it-Yourself’ alternatives for more standard legal tasks like incorporating and drafting short contracts. For lawyers who want to capture this business, they’ll need to compete on price. Aaron Pierce, a sole practitioner who primarily works with creative professionals, is seeing this in his practice, especially with early stage companies. “Businesses will often run at the start on shoe-string budgets and, in the early phases, the cost-benefit analysis of investing in experienced legal counsel attracts them to ‘Do-it-Yourself’ sites across the Internet. That said, using these sites result in a wide range of mixed consequences, some of which wind up being more costly down the line.” In either event, as long as a low cost alternative exists, lawyers who want this business will need to be more price sensitive than ever before.
Firm Consolidation Could Be On the Horizon: With sophisticated document review and legal search technologies, tasks that used to take a long time can now be done much more quickly. That should be good news- except law is typically a billable hour profession, and less time equals less money. While I predict people will still be willing to pay a premium for the advice of a true legal expert, technology will significantly reduce a client’s appetite for paying for time spent training junior associates- perhaps opening the door for consolidation of the industry. “Legal tech startups have eliminated a lot of the work junior associates used to do, so the firm model of having junior attorneys get trained over time by working on these routine matters, is no longer efficient. As a result, fewer junior attorneys are being hired and the entire pyramid structure of firms is shifting,” said T.J.Duane, Harvard Law School Graduate and Legal Tech Entrepreneur. “Eventually, in the next 20 years or so, the industry will consolidate as a result and I think you’ll see 10-20 top-tier firms that are handling the truly complex, bet the company matters, and all the other Amlaw 100 will end up breaking up into smaller firms – much the same way the accounting industry consolidated.”
Disruption To the Law Firm Model Will Continue: From how people find lawyers, to how firms find talent, to how lawyers collaborate and provide legal services, there are many areas where the legal industry can be improved, leaving the door wide open for those who can spot an opportunity and provide a meaningful solution. As these solutions continue to emerge, law firms will be forced to change in order to stay competitive. ”It’s taken an earthquake of a recession to expose the inefficiencies that have long plagued large firms, including the widely despised billable hour and the pyramid structure. For the first time in a long time, disruptive change looms, and a growing number of law firm managers know they must evolve. Yet despite their good intentions and a clear client mandate to get with the program, law firm leaders are unable to separate their firms from the old ways of doing things,” said Mark Harris, CEO and Founder of Axiom Law. “Though many of the law firm leaders are aware of the need to change, they are uncertain about the way forward. Nevertheless, innovation is coming, with or without Big Law. Overseas outsourcing of legal work is enjoying an improbable bump. Onshore, new model firms that operate without the overhead and partnership of the traditional firm – like Axiom – are cutting into law firm market share and handling complex, sophisticated work. Electronic discovery specialists and software companies are stealing much of the lowest level litigation work from big firms. None of these alternatives existed at any meaningful scale ten years ago. And, we’re just at the beginning of the revolution.”
Lawyers Will Continue to Become Entrepreneurs: Whether by choice, or in reaction to the economy, the proverbial lawyer hanging up a shingle is back with an entrepreneurial vengeance. And these days, running a start-up law firm is not too far from running a tech start-up, but with the added responsibility of regulation and ethical scrutiny. “Lawyers are increasingly using social media, hosting blogs, speaking on panels and leveraging technology to build a practice on a shoe string and deliver high quality legal services to clients at a reasonable price. Lawyers have additional challenges like ethical regulations on marketing, ownership regulations which affect building your team, and financing issues that are far stricter than for non-legal companies. Lawyers have to learn to become not only subject matter experts, but also marketing, sales, financing and operational experts to run a successful practice,” said Jennifer Hill, Startup Lawyer and Entrepreneurial Expert.
Cari Sommer para Forbes el 24/07/2013
Originally in:
http://www.forbes.com/sites/carisommer/2013/07/24/how-entrepreneurship-is-reshaping-the-legal-industry/
Picture: Matthew Wiebe (CC0)