Disruptive changes on the legal market?

A recent interesting and rich discussion between Chris Bull, international strategy consultant at Edge International and former chief executive of Osborne Clarke and former European chief operating officer at Integreon, and Erik Fors-Andrée, entrepreneur and former CEO of a legal service firm, has been summarized in the Swedish blog post “Disruptiv förändring i juristvärlden”.

For those of you who do not know Swedish, here is an abstract of the post in English.

The discussion concerned the profound changes on the legal marketplace and whether these changes were so profound to be regarded as disruptive, i.e. if there is a paradigm shift going on, or if the changes are merely evolutionary.

Chris Bull is of the opinion that the changes for most people are perceived as evolutionary, but that the evolution is going very fast in some parts of the legal market:

“An example from UK is the market for providers of legal services to consumers. The effects of the changes going on there are huge. Competition is increasing rapidly, with new law firms, law firms funded and run by non-lawyers, online services and new distribution channels such as banks and companies offering financial services. On that market, it is close to a revolution. For large firms, however, both in London and Stockholm, the changes are a little slower and they still have time to decide what to do. On the whole, it is a great moment in the development of legal services.”

Erik Fors-Andrée is more inclined to regard the changes as disruptive, but they both agree unanimously that during the next few years a number of legal actors will disappear due to failure to adapt to the changes. As elabotared  by Chris Bull:

“I think we will see a lot of names disappear from the market. There are too many law firms internationally for all to survive. Firstly, I think we will see a huge wave of mergers and acquisitions. There has been a lot of talking about this for years, but so far the development has been slow. However, everything I’ve seen indicates that it will accelerate and continue to increase. Secondly, I believe that a number of law firms will crumble, mainly by purely economic reasons. And thirdly, I think we will see more drop outs. Partners or entire groups of partners leaving a law firm and causing other to follow shortly, which will have very serious consequences for an established firm.

What we see right now is a lot of changes happening at the same time, rather than a large revolutionary change. But a law firm in 3-5 years will be very different from the typical law firm so far: in the way it is organized in partnership, with very little marketing, no business online and managed differently than other companies. Within 3-5 years a law practice will be managed very similar to how business is conducted in other industries.”

Erik Fors-Andrée has in a previous blog post (also in Swedish, “Marknadsanalys av juristbranschen”) provided his opinion that most law firm innovation is “internal innovation”, i.e. mostly aimed at the internal organization, working processes, working tools and quality ensuring, rather than “external innovation”, i.e. innovation aimed at the client with new offerings, new markets or new ways to deliver services. Chris Bull agrees that the internal-external innovation aspect is a good way to look at law firm innovation and that most innovation today is internal-focused, but he points out that:

“The large demand for innovation comes from clients, mainly from large corporate clients who want a change in service delivery and pricing. In the consumer legal services market, the customers have become accustomed to using the internet and when it is possible to make banking transactions and even more complex financial transactions online, they expect the same possibility for legal matters. I have also read studies that particularly younger people do not like to walk through the door of a law firm to meet a lawyer. They would rather go to a more retail-like environment, or use online services.”

Erik Fors-Andrée and Chris Bull further discuss the attitudes towards the changes and conclude that there is a mix of skepticism, fear and positive entrepreneurship among lawyers. Some of the fear concerns the impact on the quality in the legal service delivery and both Erik Fors-Andrée and Chris Bull share the view that quality may be endangered in some cases when new actors enter the market with other business goals than traditional law firms, but on the other hand, many new innovations will increase quality.

“The best way to ensure quality for the entire legal market, is perhaps that existing players start to move a little faster. A lot of this is about really thinking about what the customers want and what benefit them. Beyond the pure legal competence. How do we deliver legal services in new ways? The innovation that happens there will determine who is the winner in the future.”