Originally published on Women 2.0
The business of law is poised for watershed change. The late 1950s saw the rise of the billable hour from a system of monthly retainers and flat fees, as computers allowed for enhanced tracking of working hours. But the pendulum has swung too far, and with the rise of the internet and myriad new technologies, a new era is coming.
Clients are baulking at the unpredictability and sheer cost of legal services—as well as the difficulty of locating and evaluating the right attorney for the job. Client dissatisfaction is putting unprecedented pressure on the legal system to adopt more efficient business practices and become more adept at leveraging technology.
The internet has transformed the market for a wide variety of personal and professional services. These days, we compare, book and pay for doctors, babysitters, hotels, restaurants, fitness classes and beauty treatments online. Once taboo, online dating is de rigueur for most young professionals. Lawyers must follow suit.
Law has been slow to change. Lawyers are notoriously late adopters of new technologies because there are serious consequences if they make mistakes. Client confidentiality is guarded zealously and using unknown technology can be risky.
The Rules of Law from State To State
Since every state maintains its own legal bar and, consequently, ethics rules, lawyers in all 50 states struggle to find guidance as to how they can use new technology without compromising their obligations to their clients. For example, North Carolina, South Carolina and New York have permitted lawyers to offer services on Groupon, while Indiana and Alabama have prohibited this. The District of Columbia Bar has publicly condemned Avvo — a site that lists and rates lawyers without their knowledge or consent — whereas Washington State has repeatedly defended it. Legal Zoom has settled at least two lawsuits alleging that it engaged in the authorised practice of law by having lawyers not barred in a given state advise about its laws. For a lawyer whose livelihood depends on staying on the right side of these rules, staying out of the fray can often seem like the only prudent option. Likewise, the unpredictability of the regulatory regime has deterred investors from the space.
Despite those hurdles, there are signs indicating that law is about to become the next hotbed of entrepreneurial activity:
Oversupply of Lawyers
As many law firms have had to restructure and scale back over the past five years, the number of jobs has dwindled. Thousands of aspiring lawyers have graduated only to discover that there are no jobs in the field. In 2011, 19,681 out of 43,735 new graduates could not land a legal job nine months after graduation. The supply of legal services is overwhelming, yet at the same time law firms are struggling to operate profitably. With so much excess supply, it is only natural that the internet — still a new frontier for many lawyers — would be alluring, offering a whole new way of working. State bars too are catching up as these technologies become more prevalent. As more lawyers begin to use the internet and newer technologies, others will move into this space too.
Changing Consumer Demands
The marketplace has dramatically changed while lawyers continue to conduct ‘business as usual’. Consumers’ changing expectations are widening the gap between lawyers and potential clients. More than ever, consumers expect that all services can be found, evaluated and even paid for online. There has been an inversion in the culture of trust. Where word of mouth used to reign supreme, now consumers are sceptical of anything that cannot be found online. It is, therefore, logical to can expect that lawyers will start to move online to market their services and to communicate with clients, whilst simultaneously using new technologies to make their work practices more efficient.
Talking ‘Bout A Revolution
The challenges outlined above are true impediments, but they can be surmounted with creativity and experimentation, just as entrepreneurs have found new ways to unsettle industries that have similarly potent ethical standards. Although it has historically lagged behind, the financial services industry has proved remarkably resilient in finding new ways to connect with consumers and put innovative technologies to use. Of course, that law is regulated state-by-state rather than federally further complicates the problems. However, this complication is now matched by significant and unprecedented pressure on the legal market to rethink how it does business.
Opportunities abound. I predict we will see significant change in how lawyers use the internet and other technologies over the coming years. While the world of legal technology is still nascent, there is plenty of room for innovative lawyers and entrepreneurs to find ways to make the business of law work better for all stakeholders by embracing all that technology has to offer.