More on the future of law

Another thought provoking post by Jordan Furlong in Law 21 on How to solve the legal employment problem. It makes for uneasy reading,

We’ve been bingeing on reports of law firm layoffs for a few months now, and there’s every reason to think those reports will continue through 2009. But we haven’t spent as much time looking at the big picture: there is a growing population of lawyers whose jobs are gone for good, and a larger group of lawyers whose underlying business models are fast becoming obsolete. . .

During the recession, we’re all going to learn to do more with less. Cost-saving efficiency and “good-enough” quality will be the twin standards by which purchases of all kinds will be made, including legal services. Lawyers have never needed to be efficient and they’ve always preferred an exhaustive answer to an adequate one; they’re not going to adjust easily, and some won’t adjust at all. Clients also will need their lawyers to focus more on high-value services that demand advisory skills and judgment, and less on than repetitive tasks that require boxes to be ticked off and i’s to be dotted. That’s going to be more than a business model challenge; that’s a new way for many legal professionals to view themselves and their functions, and again, some simply won’t  have the wherewithal to meet the new expectations.

In particular read the take on the problem for legal education: “churning out lawyers suited for 20th century practice”.

More on the C word

In today’s FT Michael Peel reports on the very recent Smith & Williamson survey,

The legal industry is heading for a big shake-up as firms merge in an attempt to protect profits threatened by the credit crunch, according to a survey published on Monday.

The annual survey of leading lawyers commissioned by Smith & Williamson, the financial services group, said three-quarters of big firms expected to see more emergency deals as confidence fell, despite the industry’s supposed resilience.

This is not news to us in the profession. It has already started and the current economic mayhem is simply accelerating the inevitable.  In last week’s Law Society Gazette Lord Hunt, about to embark upon his profession-wide review of regulation, is reported as saying,

I will be listening to the views of the whole profession, and that includes the smaller high street firms as much as the global firms. I have a completely open mind about the best way forward. My message is – tell me what you think.

Let’s hope that there will still be some to tell him.

Batten down the hatches?

Another excellent article, Taking Advantage of a Recession in Kerma Partners Quarterly: a lot of sense and not just about weathering the storm but more how to make the weather.

One further thought is that in the UK the danger is that concentrating on getting through the downturn may mean that we ignore the impending changes in the legal services market. I am not sure that I would have used the expression ‘Big Bang’ (given that some commentors see the beginnings of the current economic crisis in the heady days of City deregulation 22 years ago), but see Peter Williamson’s Rehearsing for the Big Bang in this week’s Law Society Gazette.

And while looking at the Gazette, a stunning lead article Review of Regulation that nails once and for all the myth that we are one profession (for those of us at the coal face, we know we are not).

The C word – but which one?

The accelerating downturn, and the UK property market (both residential and commercial) hitting the buffers, has already started to change the legal market. Leaving aside the rumours of cash calls and firms in trouble, the middle market consolidation is starting in earnest (for example the recently announced merger of Withy King and Marshall & Galpin, to say nothing of the gossip circulating about who is talking to whom; or more interesting, who is not being talked to.)

It is an appropriate time to revisit Legal Services Reforms: Catalyst, Cataclysm or Catastrophe by Stephen Mayson, Professor of Strategy at and Director of the Legal Services Policy Institute. In his March 2007 review of the legal services marketplace (inefficient, ripe for reform) Mayson summed up its health as follows,

My diagnosis so far, therefore, is that we have too many qualified lawyers, too many law firms, and too many equity partners.

Later he identifies consolidation as a one of the key themes for the future, highlighting ‘the need to reduce the number of firms . . . in the interests of quality, consistency, efficiency and cost’.

Well, this is already happening and will gather pace. Mayson identified one of the drivers as the ‘natural forces of competition’. I would add to that diminishing fee income, the cost and, at the moment, the availability of borrowing, and the demographic imperative. To say nothing of the Legal Services Act, and the arrival of new entrants into the market.

Who is shaping our brave new world?

Picking up on my immediately preceding post, an excellent article, The road ahead, in The Law Gazette on the future of legal services.

In the present turn down it may sometimes seem difficult to look beyond the month end figures, but long term survival requires it, to say nothing of what the up and coming generation expects.

I cannot do better than paste in the final paragraphs,

For Susskind, the questions he always poses to the profession are: why is it that people pay lawyers good money? What value is it they’re bringing? The best answer he has seen comes from accountants KPMG, whose global mission statement is, he paraphrased, ‘we exist to turn our knowledge into value for the benefit of our clients’.

‘I think it’s a fantastic way of summarising what all of us as professional advisers seek to do,’ Susskind concluded. ‘We have knowledge, expertise, inside ideas that clients want to apply in their circumstances. It doesn’t say we exist to supply one-to-one consultative advisory service on an hourly billing basis…

‘The thing I want people to think about in the future is in the legal market we have to strive to find even more imaginative and creative and, I suspect, cost-effective ways of transferring our knowledge to our clients in a way they can apply in their circumstances.’

To do so, we also have to work out our strategies taking into account three or four key issues

1) The future will not be more of the same. Read Futurewise, Six Faces of Global Challenge by Patrick Dixon.

    2) The market for legal services is not effective: if you haven’t yet read Stephen Mayson’s paper Legal Services Reforms: Catalyst, Cataclysm or Catastrophe, you should. The problem? ‘An oversupply of qualified people without a corresponding increase in “qualified lawyer” work’; the result? ‘Too many qualified lawyers, too many law firms, and too many equity partners: and a market ripe for reform. . .  [leading to] consolidation, merger, and, occasionally, failure’.

      3) Legislation is simply accelerating inevitable change: the Legal Services Act will open the profession to new entrants, but technology, the great driver of change, is already altering the way our clients seek and take legal services (and this takes me back to The mobile lawyer, posted yesterday).

        4) The aspirations and expectations of the next generation, and the one following them, are not the same as those of us who currently determine the course of law firms.