Last week Jerome Kowalski published an interesting article with the title “Are Law Firms Going to be Replaced By Internet Based Providers of Legal Services?”, a question that received, if not an answer, at least an indication of the coming developments, by the news in Forbes on the very same day that “Google Jumps Into Online-Law Business With Rocket Lawyer”.
Jerome Kowalski warned in his article that “some time ago lawyers should beware because their jobs might be replaced by computers. I was then referring to automated document review software developed, by among others, IBM. But, today, I would suggest that lawyers should become even more concerned because their jobs are more widely threatened by the Internet and, more particularly, Internet based providers of legal services, acting in direct competition with lawyers and law firms.”
Besides Rocket Lawyer, there are other internet based legal service providers such as LegalZoom, and the newly launched QualitySolicitors, which in July announced its cooperation with WHSmith and the new Legal Access Points, as revealed in legalfutures article “Exclusive: first look at Quality Solicitors’ WHSmith presence launching next week”.
As Jerome Kowalski analyses the market trend: “The simple point here is that the overwhelming number of lawyers in the United States practice in law firms of fewer than five lawyers and the bulk of the work they do, short of litigation, is in direct competition with Legalzoom.com. And these lawyers simply cannot compete with the pricing of Legalzoom.com’s services, nor can they compete with the ubiquity of Legalzoom.com.” […] “Whether we do suffer a double dip recession, we must recognize that the core business of law firms is being eaten away at both the top levels by legal project outsourcers and at the lower end of the spectrum by Internet based providers of legal services. The various bar associations and state regulators will doubtless dither for years about modifying extant rules barring non-lawyer ownership of law firms, but the market has already spoken, and rather loudly and clearly on the subject.”
In the article in Forbes, Daniel Fischer is along the same lines when he explains that “traditional lawyers may not like it, but venture capitalists are pouring money into one of the last industries to resist commoditization on the Web.Google Ventures today announced it is part of a group that infused $18.5 million into Rocket Lawyer, which bills itself as the “fastest growing online legal service.”
Luckily though, Jerome Kowalski has some comforting words for law firms and that it “is far from lost. Law firms, at every level, must recognize that they are in the knowledge management business. They have the resources and experience to deliver substantially higher quality – and consistently higher quality services – than the new kids on the block. Law firms at every level will be required to invest in new technologies as well as even new pricing models to compete with the new kids on the block. Failing to recognize these new realities may prove disastrous.”
Thus, in essence, Knowledge Management, more efficient use of technology, innovative new ways of delivering the legal services and a strategic focus on the core business of the law firm is the “simple” cure to staying in business and not being replaced by online legal service providers. However, the law firms that are most likely to succeed will most likely be the ones that combine their own internal expertise with external commoditized parts, streamlined processes and efficient use of technology.