Right before our eyes a major transformation is occurring within the legal profession. I believe 2010 will emerge as a year that we will look back upon as a tipping point. A year where lawyers left behind the traditional confines of their office walls—no longer tethered by phone cords, computer cords, or real estate leases--to practice where and when it suits their needs and the needs of their clients. 2010 will be the year that being small, mobile, and almost expense-free went mainstream.
Several trends are intersecting to drive this major transformation. They include the rapid innovation of mobile technology, the changing perceptions of consumers, economic trends that are squeezing the bottom line for many law firms, and the rise of solo and small law firms started by big firm refugees. Let me identify and discuss how these trends are coming together to change the practice of law in fundamentals ways, and whether the Apple iPad is the tipping point in this change.
Technology Trends are Powering Change
The strongest trend is the exploding use of mobile technology because of significant recent innovations within that field. For several years laptop computers have outsold their desktop counterparts, so that more workers--including lawyers—can be productive when outside of their office environment. Being tied to a desk for 8+ hours a day is receding as the norm. Workers can take a laptop home, to a coffee shop around the corner, or to a conference a continent away and be able to do almost everything they could do while sitting at their desk.
Over the past several years we've also witnessed a dramatic maturing of the smart phone, such that more models have capabilities almost equal to many laptops. Blackberries, iPhones and Android phones all have functionalities that just a few years ago were limited to desktop and laptop computers–and they now do things no desktop or laptop ever did.
And thanks to iPhone Apps as well as now Google and Palm Apps, these phones are becoming more productive daily. Look at the growth of the Apple App Store and how Blackberry, Palm, and Google followed suit. Sure there are tons of games, but also a huge rise in the number of productivity apps like DocumentsToGo, various calendar and task management apps, and even legal-specific apps like Black’s Law Dictionary, Federal Rules of Civil Procedure, and numerous ones listing state statutes.
These changes will accelerate in 2010 not only because the hardware and applications continue to mature, but conductivity, speed, and reliability are maturing too. This smart phone connectivity trend began to really accelerate in 2009 with the launch of the iPhone 3GS, and continued with the release of the Droid late in the year. Phone companies no longer tout lots of free minutes, but speeds at which you can transfer data. In fact, just last week two of the largest wireless carriers significantly dropped the price for talking on a cell phone, but not transferring data—that side of the wireless business is still growing and generating huge profits.
Beyond cell services, we're also finally seeing the maturing of wireless broadband so that most lawyers can be connected 24/7. Wireless broadband subscribers grew by 90% in the US in 2009, fueled by both a growth in coverage areas and lower pricing. The price for this wireless service has dropped by 30% and more over the past severa1 years. We are also seeing the increase in WiMax connectivity, although that has been slowed somewhat by the poor economy. WiMax is the next generation in wireless data transfer that promises faster data transfer than current 3G networks.
Not only is mobility changing for lawyers, but for their clients as well. Individual and business clients are using technology to spend less time in the office; and many start-up businesses are forgoing the expense of office space. With the rise of tools such as Skype and GoToMeeting, more people are conducting meetings on-line rather than always in person. And how soon will we see a case where a client at a police stop calls his lawyer to oversee the interaction via his iPhone using the UStream Broadcast app?
The past year also saw the rise of the “netbook”, a smaller, less-powerful version of a laptop that is used primarily to connect to the Internet. This trend toward smaller-than-laptop devices that are always connected to the Internet will accelerate 2010 with the launch of the new Apple tablet (due later this week) and the continued convergence of net books and smart phones into products like the Nokia Netbook and Lenovo’s IdeaPad U1.
Another technology trend that is accelerating, is the rise of cloud computing. Cloud computing is where businesses do not buy, install or manage software applications on their servers; rather, the applications are accessed solely through a web browser, with all applications and data hosted and stored by the company offering the software as a service. Some lawyers have been using cloud computing in the form of online backup for several years, but this will expand in 2010 through companies like Clio, Rocket Matter that offer practice management solutions, and several others that are launching this year.
No longer will lawyers have to purchase, maintain, and upgrade software on just their office computers. Now, businesses, including law firms, can use their favorite browser from any Internet-enabled computer to securely access digital documents stored “in the cloud”, applications such as calendar and docketing, word processing, case management software, time & billing, and much more. This new generation of computing is gaining such popularity that the ABA TECHSHOW is dedicating an entire day-long track to the topic in 2010.
Another key technology trend is the growing acceptance/adoption by lawyers of the paperless office. Digitized documents are easier to store, edit, and locate. Plus, they can be transported or accessed from a growing list of devices. The ease and convenience of being able to review a document from a Blackberry, iPhone, Kindle, eReader, or other device is helping lawyers break the “paper only” mentality. For example, the American Immigration Lawyers Association offers an online electronic library for immigration lawyers, called AILAlink, that contains over 30 books which they also publish and sell in paperback form. More and more lawyers are subscribing to the service, recognizing not only the economy, but the functionality of accessing this library from any Internet enabled computer.
Consumers Want Costco Pricing
The second major trend is the changing economics within the practice of law. The consumer trend of demanding lower fees for legal work is not new, but it is now accelerating. Consumers across the spectrum from large businesses to individuals needing a quick will or medical directive continue to be sensitive to price on many legal matters. Large corporate clients who have long pressed for lower fees rarely ventured into “alternative fee arrangements” for fear they would get the short end of that bargain. However, in 2009, driven by new economic realities, corporate counsel jumped on the bandwagon.
Smaller businesses and individuals who need non-urgent legal services are now even more price-sensitive in the current economy. They are shopping more before they buy, comparing price even more than skills. However, consumer pressure is not the only force pushing prices lower.
The downward trend in pricing is also being exacerbated by the online provision of legal-type services on sites such MyCorporation and LegalZoom, clearly state that one of their benefits is that they are not to be lawyers. Consumers are turning to these services to avoid the perceived greater cost of hiring a lawyer. Whether they are getting the true information they need for their legal problem is a debate for another day; the point is they now have easy alternatives to visiting a lawyer.
Some lawyers are responding with similar web-based services. The number of lawyers offering and performing work exclusively through a “virtual law office” web portal is on the rise. The entire attorney-client relationship and accompanying work is handled through the website without ever meeting in-person. One such provider of these web portals is DirectLaw. This growing method to deliver legal services will certainly reduce the cost of delivering commodity legal services, so the price to the consumer can be reduced too.
Another downward pressure on prices comes from lawyers themselves. Lawyers needing to bring in new business are looking at price reductions as a marketing tool, not unlike when Wal-Mart touts they are “rolling back prices.” True, these lawyers are just meeting what consumers are looking for, but the sheer number of lawyers accepting or touting lower prices seems far greater than anytime in the past 20 years.
Another impact on pricing is the rise in the number of new small practices started by lawyers who have exited large firms, either due to layoffs or their own volition. These lawyers are looking for new ways to attract clients—especially clients from their former firms. Because their new firms often have far less overhead (discussed below) these lawyers are reducing their rates by 20-25% less than at their former firms. Such a reduction is attractive to clients, but sends shivers through other firms.
Squeezing the Bottom Line
The downward trend in pricing, coupled with the accelerating trends in technology, are fueling a third trend: the shedding of traditional overhead expenses and structures. Many solo and small firm lawyers are shedding the downtown office, downsizing or eliminating office staff, and outsourcing functions typically in a firm including IT costs and staffing, paralegal services, telephone answering, billing & accounting, legal research and more. Because these services are now more reliability connected by the high-speed internet, they no longer need to be connected by real estate. And because the cost of office space is often the largest expense for a law firm, prices can be reduced to meet the needs of more consumers without sacrificing profitability. Call it the “Costco-ization” of legal services, where quality, lower prices, and value beat out leather chairs, art collections, and marble halls.
It is no longer business as usual.
Why is this trend to smaller infrastructure accelerating? In part, because of the big firm lawyers who have left or were pushed out of big firms. These lawyers have the ability to practice law, but no infrastructure in which to do it. As they investigate and develop options they are often choosing lower cost options for IT, administrative support, and office space, rather than the traditional structures of a large firm. This streamlining of their practices allows them to offer their same legal counseling and skills to many of the same clients they once served for at least 20% less than their rates at the old firm.
Have you been to any big firms lately? Lots of beautiful space, but there are no people around using it. Conference rooms are empty, libraries are empty, offices are empty, yet the cost of maintaining the lease remains. Even big firm associates are sheepish when they walk guests through a fancy office. It screams “Who is paying for this waste?"
Lawyers are learning their need for office space is not as crucial as it once was, and some are using this as a new to differentiate themselves from their competitors. One new way, is for the lawyers to make house calls. Like the doctors of old, lawyers can now take their practice to the client rather than the client always coming to the lawyer. This saves the client time and potentially more money.
The final trend is the changing attitudes by consumers and by those within the legal profession.
Consumers once looked for signs and symbols of quality trust and respect. They looked to large downtown office buildings with marble and wood; they equated competence and stability with these symbols of strength. But those days are dwindling. Today’s consumers are smarter than that, fueled by the ability to find and vet law lawyers and law firms via the web. They no longer need or want the trappings many in our profession still cling to. They find their consumer needs are met at big box stores like Costco, Home Depot, and get their life-saving prescription drugs via mail order. And they are becoming more willing to shop in the same way for legal services.
Similar attitudes are growing within the ranks of lawyers too. While they have often looked down their nose at small firms, big firm lawyers are now learning small can be good. Those who have left the trappings of the downtown office realize they can provide quality legal services for a fraction of their former overhead, and they are sharing this news with those still in the larger firms.
Connecting the Dots
This confluence of trends has been taking shape for some years, but I believe will be rapidly and sharply defined in 2010. The evolution of technology tools to run a business without traditional brick and mortar has matured so that any lawyer can take advantage to run a more profitable and cost-effective practice from anywhere they choose.
Is the Apple iPad the tipping point? If it has the same influence on the tablet/laptop market that the iPhone has had on the smart phone market, then the answer is clearly “yes”. Sometimes it takes just one piece of well-designed hardware or software to be the tipping point with all the other trends in the world at that moment.
I believe we are at that moment again. With lawyers looking for reliable, affordable tools to run their practices more effectively, efficiently from almost anywhere except an office building, I think we are at that watershed moment.
And even if the Apple iPad is not the tipping point, there are plenty of Windows-based tablets, new smart phones, and new cloud computing services that can take us to the tipping point in 2010.
Once again that tipping point is the place in history where those who embrace and adapt will more likely find renewed success, and those who ignore or refuse to change are at greater peril for failure.
To paraphrase a Microsoft slogan that was a few years too early: Where do you want to work today? There is nothing stopping you now.
UPDATED to reflect the tablet is called the iPad.