Family-controlled businesses are driving change in the legal profession, and family lawyers have the choice to either get ahead of that change or be swept aside. Here are four trends to watch in the legal services market.
By Matthew Erskine, Trust and Estates Attorney
There has been a sea change going on in the legal professional services since 2008. It has accelerated with the COVID-19 Pandemic and family businesses, and family firms are driving that change.
We can look for trends – always fragmentary varied and contradictory – in a range of sources: from academic research papers, self-promoting white papers, software websites, and professional magazines. Combined, we begin to see a fuzzy picture that may include several alternative futures for lawyers in the post-COVID world.
Clients are driving the changes with new requirements they have for their lawyers, despite what lawyers need or want. As such, family businesses need to clarify and enforce requirements that align with their objectives – which includes how to hire successors in the future – for the existing trusted legal relationships they rely on today.
Here are 4 Key Trends in the Changing Legal Services Market
1. Technology Trends
Clients have embraced technology. For a profession more traditional than most – and one more constrained by outmoded regulations than most – staying up-to-date with changing technology is a challenge. Technology trends include:
- Lawyers and law firms lagging behind both their clients and other professions, and making basic technological mistakes,
- Client-driven innovations in access to self-service, mobile legal services,
- App-based analysis of legal issues,
- Mergers between practice management systems, work retrieval systems and CRM systems,
- iPads and iPhones will be provided to clients pre-loaded with the applications to access information and documents rather than using paper or email copies, and
- Lawyers will need to prove competency, security, and reliability of their online legal services.
2. Regulatory Trends for Law Firms
Globally, most lawyers are subject to a patchwork of regulations based on state jurisdiction while some law jurisdictions (such as the UK) have gone over to a single, national regulatory authority. Regulatory trends include:
- Non-lawyers will be allowed to invest in law firms,
- Law firms will brand services and leverage branding to increase profits,
- Non-lawyers and outsourced legal services will provide the routine and repetitive legal services to clients directly,
- Automated legal services will be permitted,
- Legal practice management and client’s business management will be integrated, and
- Greater reporting requirements will be enforced.
3. Organizational Trends for Law Firms
Law firm business models will change to “unbundle” the lawyers and services they use from a law firm so that clients can put together their own collaborative teams. Legal organizational trends include:
- Lawyers will become integrated into an overall multi-disciplinary operational knowledge base of the client,
- A polarization between a few very large law firms and individual niche experts working independently,
- Firms will consist of multiple independent partnerships under one branding entity,
- Client creating localized or specialized networks or “pods” of professionals based on a secure collaboration application, independent of the firm to which the lawyers belong, and
- Niche and solo practitioners will join branded networks for marketing and sales.
4. Legal Roles
The lawyer as the isolated expert in the corner office who provides access to legal information and is paid on time expended rather than achieving an outcome is going away. Clients will have direct access to technical experts who only act when specifically requested (such as legal outsourcing) for routine legal services at commodity prices. Lawyers will provide the innovation and creativity the client needs and will be paid on the value to the client of the outcome of the work done. As an active collaborator, the lawyer will be the source of solutions, facilitating joint ventures, between and among clients, for specific projects. The trust adviser role already exists in most cases, but the succession of new lawyers into that role is uncertain.
Trends in legal roles include:
- The median age of lawyers will increase, and the diversity of gender, background, and ethnicity will expand,
- Clients will integrate lawyers into their overall organization,
- Less of the “ask the expert” model, more creative ideas, collaborative solutions, and outcome facilitation, and
- Partnering with clients in a deep mutual knowledge-based relationship rather than handing off the client relationship to an associate or paralegal.
The legal profession is highly resistant to change but change is here. What the final result is going to be is unclear, but it is clear that purchasers of legal services, including family businesses, will drive that change. The clients require services that are both unbundled and networked in a multidisciplinary manner.
Family Businesses Will Require Their Legal Service Providers to Change
These requirements will include the following:
- That service providers have a highly networked “Pod” structure independent of firms that can integrate with the client’s organizational systems. Legal services can no longer be provided in a vacuum or bundled with other services and products. Both transparency as to what the workflow of the legal services are and access to the broad range of services and expertise are a must.
- That service providers develop specialized (and secure) self-service access to legal analysis and knowledge base that is useful for non-lawyers,
- That legal service providers adhere to a higher standard of professional conduct and not just to the patchwork state regulations, and
- A change in billing away from paying for effort (i.e. hourly billing) to paying for the relative value of the outcome (i.e., value billing).
As their existing legal needs change, family businesses and family offices must select and develop new legal service providers, lawyers, and nonlawyers. These service providers will be technical commodity-based service providers, custom innovation service providers, and succession process service providers for trusted advisers.
Change is coming in the legal profession, and the details of that change are uncertain. What is certain is that family-controlled businesses, as major customers of family law legal services, will drive that change. Lawyers have the choice to either get ahead of that change or be swept aside.
Matthew Erskine is Managing Partner at Erskine & Erskine. He concentrates on providing legal and fiduciary services for families with assets such as real estate, a business, or unique assets. His focus is ensuring financial security while preserving the ownership of a unique – but often illiquid – asset for the client and the family. www.erskineco.com
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