Posted by: johnocunningham | July 28, 2013

Market Trends That Law Firms Can’t Ignore

Sometimes we are so preoccupied by the here and now that we can’t even take time to see the future, plan for it, and reorient ourselves to make the most of it. That is when we are most susceptible to surprise, and especially to defeat.

Susan Saltonstall Duncan’s recent post entitled, “The Future is Here: 10 Trends and What Your Firm Should be Asking,” found on her Rainmaking Oasis blog, provides a great lens through which law firms can examine the marketplace conditions and trends that they must deal with in both the near and more distant future.

I recommend reading her entire posting, but there are three trends that I think deserve particular attention from those who would seek to insure that their firms continue to thrive rather than falling like so many domino tombstones in the graveyard of unforeseen consequences.

1. Demand for legal services has been softening as the supply of lawyers has been expanding. Only in recent years have law schools seen their enrollments flatten after decades of steady increases and continually rising bids for graduating “stars.” Meanwhile, clients have become increasingly savvy about bringing legal work in-house, hiring contract lawyers, bargaining for discounts and fixed fees, and even outsourcing some legal tasks (such as discovery tasks) to technology providers or other non-lawyer specialists,

2. Legal service outsourcing continues to grow at an accelerating pace. Providers of digital discovery solutions, intellectual property research firms and consultants, compliance consultants focused on one type of regulation, and corporate service providers who perform incorporations and a growing number of other routine corporate tasks are just some of the outsource providers that are competing with law firms in recent years. In many fields, such as the electronic discovery field, they still hold a minority percentage of the overall market share for services in their discipline, but that share is growing quickly, as Duncan notes, at compound annual growth rates well above 50 percent in many fields.

3. Technology is proving to be not only a tool, but a disruptive market force for lawyers. Predictive coding and artificial intelligence that allows computers to “learn” as they do tasks will pave the way for computers to sift through mounds of documents to find key data faster, more effectively and more cheaply than lawyers. Computers, aided by lawyers (either at firms or more likely at outsource specialists) will be used more and more often by clients. As Watson-like artificial intelligence is applied to all kinds of databases (such as databases full of every case, regulation, and statute) even legal research will become a task for technology, minimally guided by lawyers.

Now is the time for law firms to take stock of the competitive landscape, anticipate the future, and design a plan to deal with it. The lawyers of tomorrow will need to seek out and find cost-effective solutions for clients, they will need to develop their own technology solutions for clients, they will need to master process improvement and project management skills (as their clients have), and they will have to partner with other service providers, all to reduce costs for clients while improving delivery times and shrinking costs. Those who can do that will claim more and more market share. Those who can’t will soon be in their rocking chairs, pining for the good old days before “law became a business” because it became subject to the same market forces that govern all other human activities.

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