Few law firm consultants and analyts have spoken, lectured and written about the future of law firms and lawyers than Canadian Jordan Furlong. Having spoken to lawyers throughout North America and Europe, Jordan Furlong’s views on what lawyers need to do to survive rapid change in their profession has become some of the most read and listened-to advice anywhere in the world.
LawFuel spoke to Jordan Furlong with some tips on where the law is going and what smaller firms in particular need to be doing to survive and prosper in the challenging new world ‘Law Order’.
LawFuel: What can/should small law firms do in order to meet the challenges that technology presents today in terms of delivering their services? In other words, while they do not have the financial resources of start-up ‘virtual firms’ or Big Law, they still want to be relevant and even occasionally ground-breaking in what they do. But how? What should they focus upon?
JF – One way to look at technology is as a challenge, and in terms of staying aware of what new technologies are emerging and figuring out which are worth paying attention to, I suppose that’s right.
Practising law is still a full-time job, so if you feel pressure to also read every legal tech blog and column, that’s another job right there, and it’s going to make things difficult. (Note: I don’t think you should read every tech blog and column.)
“Technology” is nothing more than a ten-dollar word for “tool . . “
But technology presents an opportunity to law firms at least as much as it presents a challenge, and that’s the way I recommend lawyers, especially those in smaller firms, look at it.
“Technology” is nothing more than a ten-dollar word for “tool,” so think of it this way: what tools do I need to command in order to run a successful and profitable law practice?
LawFuel – What’s technology’s benefit for small firms?
Technology’s major upside for small firms is, I think, on the internal side of the business more so than the client-facing side.
The first and easiest thing to do is look at the technology you’ve already got and ask whether you’re making good enough use of it. Excel is a prime example: how many people in your office (including you) know how to create and maintain a spreadsheet, one of the simplest yet most powerful technologies available to law firms?
How many people use Rules in Outlook to manage incoming email?
What’s the state of your firm’s tickler system to handle filing deadlines and limitation periods? These are tools you already have at your disposal: they cost you nothing to install and maybe a day’s worth of training to maximize their benefit.
. . train your people so that you get the most out of the purchases you make
There are also more advanced technology options available on the market that can improve your operational effectiveness. ]
Thousands of solos and small-firm lawyers in North America swear by cloud-based practice management systems (like Clio), most of which are available to New Zealand practitioners as well.
These online software suites can replace the myriad CD-based practice management software programs that many firms laboriously installed and updated throughout the ‘90s and ‘00s. These are easy wins: small efforts at minimal cost to upgrade your efficiency. And again, train your people so that you get the most out of the purchases you make.
LawFuel – What about the ‘external’ side of things?
There are also gains to be made through technology on the external, client-facing side of practice. Electronic billing is an obvious one.
Many law firms still send out paper invoices through the postal service (or if they’re really advanced, as email attachments) several weeks after a legal service is performed, and they don’t expect to see a payment for 90 days. That’s kind of crazy, when you think about it. Not only does it keep cash out of your hands longer than it should, but it also inconveniences your clients and reduces their impetus to process your invoice.
“strive to make “flat fee” the default setting for all your legal services”
So bill your clients through an online service immediately upon completion of a task — US studies have shown this significantly increases payment speed and realization rates.
Use Paypal – And give your clients the option of paying with credit cards or through PayPal. Make the process of paying you as easy as possible. (And while it’s not a technology issue, since we’re on the subject of billing: strive to make “flat fee” the default setting for all your legal services.
In other words, don’t start off with the assumption of hourly rates and offer a fixed fee as the exception; establish fixed fees as the default presumption and place the onus on rebutting that presumption to bill by the hour.)
LawFuel – So how can firms make themselves somehow different from the crowd?
I guess what I’m saying is that given the fast-changing and more aggressive state of legal market demand, making better use of technology in your law practice is absolutely essential.
But equally given the sorry state of most law firms’ response to market demand, your firm can still stand out and make clear gains simply by making better use of the tech you have now and making selected investments in newer technologies to make life easier for your clients and for you.
Don’t worry about artificial intelligence and other out-there topics, at least not yet; nail down the basics before moving on to intermediate and advanced. Many of your competitors don’t even have the basics right yet.
LawFuel – Do firms need to ‘niche down’ and become more boutique, or do they simply need to present a new, more modern face to their market and deliver their services more efficiently (process improvement)?
JF – I don’t see any reason why they can’t do both.
I do think that the future for solos and small-firm lawyers is much more in niches rather than in general practice.
There are a couple of reasons for this. The first is that the kind of work we consider “general practice” (and that traditionally has been associated with small-firm lawyers) is going to leave law firms and go to commercial non-lawyer legal service providers.
In North America, companies like LegalZoom and Rocket Lawyer are leading the way, but in the medium- and long-term, most of this work (real estate transactions, wills, simple business law, etc.) will wind up in online applications and software programs.
You’re likelier to find people getting wills done through Amazon or Google than through your local solicitor.
So “general practice” consumer law is going to leave sole practices and small firms. And when you think about it, this is as it should be.
LawFuel – Is this because of increasingly complex laws, as well as through technology developments?
It was sensible back in the 1960s or 1970s for a one- or two-lawyer shop to do a little bit of everything, because there frankly wasn’t that much to know: the world and the law were both considerably simpler and smaller then.
“. . it’s not realistic for a single lawyer to stay competently up to date on multiple legal fields”
But today, even “straightforward” areas of the law are deep and increasingly labyrinthine, and it’s not realistic for a single lawyer to stay competently up to date on multiple legal fields.
Really, that’s what big firms are for, isn’t it? The whole point of being a large firm is to be “full service.”
And anyway, even if you have your heart set on being a legal GP, the market soon won’t allow it. As software and systems take over these areas of work, the price at which these services are sold will drop well below any amount that a lawyer could charge and even hope to turn a profit.
The general practice solo is part of a history that’s passing. If you’re in a small community, it will hang on longer than in urban centers, but the eventual outcome will be the same.
LawFuel -So what’s left for solos and small firms?
Niches, again for a couple of reasons. One is that the ever-increasing complexity of the law means that even a narrow, tightly focused area of practice has significant depth and breadth, enough to sustain a practice in almost anything.
And the second reason is that, thanks to the internet, a small-firm lawyer’s market is no longer restricted just to her city or town or neighbourhood, but can extend across a country or even beyond. There are no borders when it comes to online marketing, and the more you specialize, the more likely you’ll be found by people searching the web for your particular unique niche.
As to the other aspect of a modern small-firm practice, increased efficiency and process management, the answer is an even more resounding yes.
” . . the crazy thing is that an inefficient, hourly-billed practice hurts no one more than the lawyer herself”
That’s not a goal to which any professional service provider should be proud to aspire. Try telling a client that that’s why you avoid efficiency, and see if you can look them in the eye when you say it.
And the crazy thing is that an inefficient, hourly-billed practice hurts no one more than the lawyer herself.
I don’t care how hard you work, how many nights and weekends you spend at the office and how much you neglect friends and family to do it: there literally are only so many hours in a day that you can bill to your clients.
“When you make “time spent” the financial foundation of your practice, you’re setting an arbitrary, artificial ceiling on your earning power.”
When you make “time spent” the financial foundation of your practice, you’re setting an arbitrary, artificial ceiling on your earning power. You’ll never be able to bill more per day than (your rate multiplied by (24-x) hours).
But when you decide to make efficiency a priority and abandon the hourly model for pricing your work, you open up whole new worlds of profit possibility.
Fixed fees encourage you to get the work done faster, so that you can use the remaining time to do even more fixed-fee work. Automate a process so that you can render a service 10 times an hour, rather than once.
You could reduce your effective billing rate by 50% (improving your competitiveness) and still make five times as much money as you did before.
Faster doesn’t have to mean lower quality, by the way — process improvement systems like project management and checklists actually enhance the quality of your output while reducing time spent.
More importantly, you align your practices and procedures with the interests of your client, who wants (a) good work (b) priced affordably and (c) done quickly.
Alignment with your client’s interests is always, always a good thing for a law practice.
LawFuel – For that matter, do they really need to increase that EQ and their attitude towards themselves, their clients and their work?
JF – Attitude determines altitude, as I once heard someone colourfully say. Lawyers need a good attitude towards themselves, their vocation in law, and their clients.
The absence of a good attitude leads, respectively, to (a) grouchy and depressed lawyers, (b) low morale in law firms, and (c) indifferent or even callous service to the people who are paying our bills.
I don’t think you’d disagree with me that these three foregoing features are far more common throughout the legal market than they ought to be.
“There is probably no skill in shorter supply among lawyers than empathy . . “
This fact often comes as an unpleasant shock to many lawyers, but law practice — especially solo or small-firm practice — is a people business. This is an unhappy realization for many lawyers who went into law because they were introverts who preferred the company of books and the confines of their minds over human interaction.
There is probably no skill in shorter supply among lawyers than empathy: feeling for your client, putting yourself in his position, seeing the world generally and his legal situation specifically through his eyes rather than your own, and then listening intently to what he has to say.
Equally, there is probably no skill whose successful development and deployment presents a shorter and better way to more satisfied clients and a happier law practice.
LawFuel – What’s the good news here?
JF – The good news is that, given how most lawyers are short on empathy and EQ, even displaying a moderate amount to those around you will vault you to the front of the line in this regard.
The competition for “World’s Most Empathetic Lawyer” is not exactly Olympian. In fact, this rule applies to almost everything in this article. You don’t have to adopt these practices and procedures and attitudes better than anyone else in the legal profession.
You just have to adopt them. As the old joke goes, you don’t have to outrun the bear. You only have to outrun the other hikers.
Several years ago, I wrote a post about solo practice that I still think holds up today. How David beat Goliath expands on that foregoing theme: don’t try to out-muscle BigLaw or out-technology the IT specialists.
Solo and small practice has its own built-in advantages, and chief among those are the ability to move quickly to adapt to changing market circumstances, run low-cost yet high-quality law practices, and develop a personal touch that clients find satisfying and memorable. Play to the strengths, not the shortfalls, of small-firm practice.
This wing of the legal profession is still a great place to practise.
Jordan Furlong of Ottawa, Canada, is among the world’s leading analysts of the legal industry. He forecasts the impact of the changing legal market and provides strategic advice for lawyers, clients, and legal organizations. Jordan has addressed dozens of law firms, lawyer associations, state bars, law societies, courts, and law schools throughout the United States, Canada, Europe, and Australia regarding the impact of legal market forces on members of the legal profession.
Jordan is a Fellow of the College of Law Practice Management, a Policy Advisory Board Member of Responsive Law, and an Advisory Board Member for the ABA’s Center For Innovation. He also serves as Legal Strategist in Residence and Co-Chair of the Institute for Law Practice Management and Innovation at Suffolk University Law School in Boston, where he has taught courses on the future of legal practice. He writes regularly about the changing legal market for several periodicals and on his website, Law21.ca.