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By Nick Jarrett-Kerr
I don’t want to contribute yet more dire predictions to the welter of doom-laden prognostications about the future of the legal profession. It’s not that I think they are necessarily wrong, as I agree with many of the sentiments expressed by leading pundits such as Susskind and Mayson. But all the evidence from other sectors which have entered a period of extreme change – from opticians to financial services providers – is that the profession will survive in some form or other, that there will be winners as well as losers, and that firms that get their strategy and business recipe right (two slightly different things) will prosper. There seem to me that two obstacles – amongst the many strategic obstacles faced by law firms – need to be navigated by any firm that wishes to survive and prosper in this new age.
The first hurdle is to avoid the Replicability test. Any service which can easily be copied, replicated or imitated is at risk from new providers with muscle. That’s why commoditised services which are easy to systemise and which do not need professionals with a lifetime of learning and experience are so much at risk. In contrast to this, individualised and specialised solutions are not so easy to copy, and qualities such as insight, judgement and intellectual prowess are less easy to imitate.
The second element to watch out for is Repeatability. One thing which can deter potential external investors in the legal market is that legal services are seen as ad hoc and episodic. Clients come to law firms when they have a problem or a transaction and hence private clients (in particular) will generally only use a law firm on a handful of occasions during their lives. Investors prefer to see a consistent and sustainable stream of business, so tend to look for businesses where the stream of business is predictable every month and the route to market is secure and tenable. That is why investors are attracted to firms with a good stock of panel appointments, referral arrangements and portfolios of large commercial clients with a constant need for legal services. They are also deterred from businesses which are reliant on the individual acumen and abilities of the particular personalities in the firm.
Of course, Repeatability is a bit of a double-edge sword as all law firms want to see a regular flow of repeatable work in their business, particularly as episodic business is so hard to predict and target. But episodic business does at least require law firms to concentrate on and nurture a wide and deep set of established client and referrer relationships and to develop the sort of reputation and standing that is likely to attract new and existing clients.
The best way that the empire of traditional law firms can fight back is through personal, individualized and specialized services that are difficult to imitate and which rely on reputation rather than referral and on personality rather than panels. But that fight back also needs a preparedness to adapt and change in order to improve service, to embrace systems and processes where those can be brought to bear, and ultimately to give clients what they want at a cost which remains competitively viable.
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