Jordan Furlong is a legal market analyst, author, and consultant who forecasts the impact of changing market conditions on lawyers and law firms. He has given dozens of presentations to law firms and legal organisations throughout the United States, Canada, Europe, and Australia over the past several years. In this article for Modern Law, Jordan discusses the challenging implications and extraordinary opportunities of a new legal economy.
The market for legal services has experienced a tremendous amount of change over the last decade, including:
- the rise of legal process improvement and outsourcing,
- the emergence of competing or substitute service providers,
- the technology-driven commoditisation of legal work,
- the growing sophistication of large law firms and law departments, and
- the slow but steady liberalisation of legal regulation.
Today’s legal market features increasingly knowledgeable and assertive clients choosing from a growing array of diverse service providers. In the result, sellers have more incentives to compete on price or quality (or both) and more tools with which to do it, thereby delivering greater value to buyers.
These are all indisputably good outcomes, and whereas most lawyers reflexively opposed these changes when they first emerged, many are now coming to accept this new landscape, and a few have even welcomed it and striven to capitalise on the opportunities it offers.
But now I think we’re coming up on a new issue. Throughout all of this amazing market change, one thing has remained largely constant: What lawyers do. Market evolution is changing the “how” of lawyer work, and to some degree the “who” as well — but thus far, it has had relatively little impact on the “what.”
Here’s what I mean. A client who retains a lawyer in 2020 to defend against a litigation claim might require that, say, the work be done on a fixed-fee basis, or that an e-discovery company be employed, or that the entire retainer be subject to project management.
But the lawyer is still being hired to handle the litigation: To assess the claim and its likely outcomes, negotiate a settlement if appropriate, and proceed to trial if not. The essence of the relationship remains the lawyer’s agreement to defend the litigation on behalf of the client.
But suppose, in the example above, that there was no litigation. Suppose that, for a variety of reasons, the client never approached the lawyer in the first place to inquire about her litigation services. All the project management and fixed pricing in the world are irrelevant in the absence of the retainer. That’s not a matter of how lawyers do their work. That’s a matter of what lawyers are actually doing — or not being asked to do — inside the market.
Why might there have been no litigation in the foregoing example? Some possibilities:
- The client improved its internal risk-monitoring mechanisms and caught a problem in its early stages before it metastasised into a statement of claim
- The client implemented new workplace standards that changed the behaviour of an employee who otherwise would have done something to cause litigation
- The client hired a Big 4 accounting firm to build compliance requirements directly into its contracts and business processes, reducing the risk of violations
- The client consulted data showing that claims of this type succeed 89% of the time, and ordered the in-house department to settle it quickly at the outset
- The client is based in a jurisdiction that offers a robust online dispute resolution process that disposed of the litigation twice as fast for one-tenth the cost
Some of these examples are still speculative, while others are already commonplace. But what they share in common is that the traditional application by lawyers of their knowledge, skills, and time is not a factor in any of them. These examples, and more like them to come, are going to change the “what” in “what lawyers do.”
A substantial portion of the practicing bar makes its living primarily by managing, contesting, and winning (or losing) litigation. Litigation, from these lawyers’ perspective, is a good thing, and the more of it the better. But from the client’s perspective, litigation is an entirely negative experience, one that he or she is strongly incentivised to minimise, avoid, or eliminate.
Twenty years ago, of course, it didn’t matter whether the client liked litigation or not; it was an unavoidable fact of life that required a lawyer to resolve. Today, however, clients have access to tools, procedures, and options that enable them to fulfil their desire that litigation either never occurs or disappears quickly and affordably.
What happens to litigators when clients find ways not to litigate?
The nature of what is being bought and sold within the legal market is changing. Clients are becoming interested in purchasing the prevention of legal problems, the quick resolution of disputes, the automatic compliance with regulations, and the built-in fulfilment of agreements. They’re buying what amounts to: “I don’t need a lawyer.” Lawyers, perhaps needless to say, aren’t selling that.
Clients used to ask lawyers for certain types of services like document preparation, contract review, transactional due diligence, and dispute resolution, to name just a few. These services still constitute the bulk of many lawyers’ annual sales inventory. Today, however, clients are asking lawyers for these services less frequently, and in the future, they will ask for them less often still. Systems, software, and structures are emerging that will either perform these services automatically, or eliminate the need for them in the first place.
The truly disruptive impact of advanced technology in the law will be to reduce the incidence and volume of traditional legal work given by clients to lawyers. This isn’t just a market change; this is the emergence of a new legal economy.
The old legal economy consisted of paying lawyers by the hour to do every legal task that needed to be done. The new legal economy will offer a new, if you’ll forgive the acronym, IDEA: Systems, software, and structures are going to
- Eliminate, and
countless tasks by which lawyers once made a living.
The rise of a new legal economy will require a thorough review of all our assumptions about what legal work consists of and, ultimately, what purpose it serves. In the result, everyone in legal services, buyers and sellers alike, will need to rethink their possibilities, interests, and opportunities.
For the legal profession, one question towers above all the others and demands our attention: In the new legal economy, given the rise of “I don’t need a lawyer for this,” what will lawyers do?
Answering that question will, or should, preoccupy the leaders of the legal profession over the course of this coming decade. My small contribution to that effort would be to suggest the following four categories of responses, which can be arranged in the consultant’s favourite diagram, the four-quadrant chart.
1. Retreat to higher ground. The rising waters of commoditisation and systematisation will submerge many of the low-lying sectors of lawyer activity described above. But some lawyers will be able to escape the surging tide by virtue of their specialities.
There will be fewer trial lawyers in future, but there will still be some, and they will be the most exceptional advocates practicing at the highest levels. Clients will still need empathetic advisors and well-informed counsellors, more than they do today, and some lawyers will develop these skills to their utmost. Genuine experts, possessing unparalleled knowledge and insight that cannot be adequately reflected in a database entry, will thrive.
The coming changes to our legal ecosystem will not render all species of lawyer extinct — even in the distant future, there will be lawyers performing services and helping clients in ways that will be familiar to those of us with roots in the 20th century.
2. Support the new systems. Many lawyers who find that systems and software are performing tasks for which they once billed hours will decide not to rage against the machine, but instead to support the machine, maintaining and further developing its effectiveness.
After all, someone will still have to understand how the law works, in order to translate statutory guidance and common-law reasoning into lines of code and algorithms. And someone will have to create the risk-monitoring mechanisms, design the workplace standards, and carry out the data analysis in the examples cited at the start of this article. These are lawyer tasks, and lawyers will be needed to perform them.
The development of artificial general intelligence is a very long distance away, and most AI developed in the meantime will augment human reasoning and ingenuity, not replace it. The machines still need us more than we need the machines.
3. Address unserved markets. It is a truth universally acknowledged, although seldom addressed to any practical degree, that only a small fraction of the legal problems and opportunities that people and businesses face ever make their way to a lawyer. That will change in the new legal economy.
All the systems and software described above sound wonderful — but not everyone will be able to afford them and access them. While rich people and large in-house law departments will experience a Golden Age of Law, the vast majority of individuals will be left to struggle through increasingly underfunded government programs and antiquated courts. These people will be in truly dire need of help — and some lawyers will respond, sacrificing higher incomes and more prestigious postings in order to serve the greater public good.
Providing community-based legal aid, building street-level systems to help people get the benefits they’re entitled to receive, crowdfunding the resources to fight for just causes – those are just the basic tasks lawyers will render in the early days of the new economy. As time goes on, more will emerge. And that bring us to:
4. Create new opportunities. If the only answers to the question, “What will lawyers do?” are “Retrench,” “Assimilate,” and “Help the poor,” then the future of the legal profession will be significantly less interesting than its past. But I’m willing to bet on lawyers, and on their creativity and passion, to do better than that.
In a legal economy premised on fewer problems, higher standards, faster performance, and integrated solutions, lawyers will be challenged to come up with new value propositions, new ways of helping people live better lives with fewer complications. What will they come up with? Maybe a “law school” that educates individuals on their legal rights and risks? An affordable online “legal utility” that replaces arcane legal paths with clickable solutions, an AI-guided digital resource to replace linear and analog methods? A travelling dispute resolution roadshow with pop-up locations in marginalised communities?
The hidden gift for lawyers that will emerge in the new legal economy is that losing our old tasks will liberate us to find new purpose. Lawyers’ future will be limited only by our imagination, ambition, and compassion. We can forge the legal profession we truly want, not the crumbling legacy institution that was bequeathed to us.
What will lawyers do in the new legal economy? It’s really up to us. Which means, dear reader, that it’s really up to you.