Reimagining legal services:
Pivot or pay the price.

Lately, I’ve been thinking (and writing) quite a bit about change in the legal field, in large part because I’ve been reading Mitchell Kowalski’s recently published book, “Avoiding Extinction: Reimagining Legal Services for the 21st Century” (ABA 2012).

This book is about Mitchell’s vision of reinventing the delivery of legal services to conform with the 21st century world that we now live in. He theorizes that law firms that fail to do so will soon be extinct. He explains that the business model used by most law firms–one based on the billable hour and high-priced, increasingly mobile partners–is no longer viable in the 21st century. Despite overwhelming proof of this fact, evidence of which is provided throughout the book, most law firms are nevertheless resting on their laurels, steadfastly reliant upon an outdated business model set to implode.

And, as I was reading this book, that is exactly what happened to a seemingly well-established and thriving BigLaw firm. Dewey & LeBoeuf went “poof,” thus confirming Mitchell’s well-thought out theory. Although this event may have surprised many, Mitchell is no doubt sitting in his office, nodding smugly, since he predicted this very event in his book:

Take a law firm for instance…(T)here is a disincentive for lawyers to act in a way that assures the long-term interest of the firm, because acting in the long-term interests of the firm will reduce the amount of money that each lawyer makes in the short term…And success further compounds the problem…(E)ach successful year perpetuates a sense that this is the correct model…This gives law firms a distorted sense of reality…(where) greed rather than proper business practice, is driving pricing to clients…(and creates) a firm that (will) be blown apart by the greed of a new group of partners…years from now (pp. 115-16).

As Mitchell explains, firms wishing to avoid this fate must re-envision their business practices to conform with the times. The key is to avoid conducting business as usual and to constantly revaluate the delivery of legal services:

Truly successful law firms will be those that can combine an ability to respond to a changing market with scale. Agility means moving to the “cloud” to take advantage of its scale and technology or it means achieving scale quickly through home-sourcing or off-shoring. Agility is simply not possible in a large partnership structure where partners can derail a proposal because it will reduce their draws (p. 15).

In other words, the legal field needs to learn how to “pivot.” This practice  is at the heart of the philosophies of many a successful business, from startup companies to the Beastie Boys, as discussed in a recent Fast Company post, Pop Goes the Pivot.

As the author explained, the key to the success of the Beastie Boys was their ability to recognize that their audiences responded more to their rap songs rather than their hardcore punk sets. So, the Beastie Boys listened to their fans and “performed a ‘zoom-in pivot,’ (by) turning a feature of their product into their main offering.”

In other words, as explained in the article, the key to a successful pivot is to constantly reexamine a business model and be open to change. Stagnancy and short-sightedness are enemies of the pivot:

Pivoting has to be evolutionary, based on sifting through the appropriate data. It’s at the heart of the “fail fast” concept. The sooner you realize a hypothesis is wrong, the faster you can update and retest it. “It’s paramount to understand that a pivot isn’t simply a change in one element of the business model…but rather a change precipitated by something the founder has learned and validated to be true or untrue about a hypothesis she has tested.”

But can–or should–law firms pivot and change a business model that, up until recently, has worked “just fine” for centuries? And what about solos and small firms? Sure, large firms have the resources to manage and oversee the outsourcing of legal work overseas but is it really feasible for smaller firms or solos? Absolutely.

For an example of this, you need look no further than our post from last week–where we featured MyCase user Patrick John McGinley. In it, he offers tips on how solos can take advantage of technology and outsource legal and administrative tasks, both locally and overseas, just as his firm does.

As he explained, he didn’t always practice law as he does now; instead, he pivoted over time and adjusted the structure of his practice in direct response to societal changes that he saw occurring around him:

Instead of increasing the number of employees, my goal is to increase my client base and my firm’s revenues. One of the primary ways that I achieve this is by outsourcing. Much of my staff is in Singapore. Things I used to hire staff for I now outsource, such as dictation. But it’s not just limited to back office tasks. I also outsource legal work for less important matters. And, I outsource IT. It just makes sense. When I made the move to MyCase, I stopped being the tech guy. My clients don’t hire me because I’m a great tech guy–they hire me because I’m a great lawyer.

In other words, he reimagined the way that his law firm could profit, all the while efficiently and effectively delivering legal services to his clients. So, he now provides better representation to his clients and, as an added bonus, managed to avoid extinction in the process.

Not a bad trade off. Which then begs the question: If Patrick could pivot, why can’t you?

-Niki Black

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