The ability to spontaneously “crowd-source” expertise online
1. The idea that highly skilled professionals (men, women, experts, whomevers) are on a “spot market exchange” is very sensible. Particularly for project work under, say, $100,000. … The logic of a liquid online market exchange is irrepressible, undeniable, magical. It will 100% happen. And it won’t be academics or philosophers that will do it – it will be practical, sensible, humble business leaders who listen carefully to their audience and offer a micro-niche professional services solutions that dominate their market. 99Designs in design is an excellent example and an early winner.
2.I call this emerging mobility the concept of the “ATEAM” – the day when the best professional services teams in the world can be created instantly, anywhere, on-demand. […] – no intermediaries, no middlemen, no admin, no rubbish. We just need a global credible project management marketplace and this will readily become a real possibility…and quickly. The value-add will be in selection, configuration, alignment of goals, setting incentives, insurance and performance appraisal. (From John Persico.)
BigLaw’s powerful motivation to fight back
George Beaton expresses this quite pithily:
I don’t under-estimate the resilience of BigLaw owners, i.e. partners. The stakes for them are very high. They are clever and hard-working, as we know. My back-of-envelope figuring indicates the ~2,000 equity partners in the 20 largest firms in Australia earn an average of ~$1m per year (round numbers). Of these I calculate ~1950 would not get a job practising law in-house for even half this amount. So, in a survival sense, BigLaw is not going to lie down.
The undeniable reality that NewLaw is not burdened by legacy ownership structures, systems, or compensation models, and virtually unanimous agreement that the changes of the past five years are structural, not cyclical This from Mitch Kowalski:
Unlike Joel, I see structural change in the marketplace.
The growth in the number of inhouse counsel is structural, not cyclical. This growth is a symptom of law firms pricing themselves out of certain types of work. This never changes back unless firms can demonstrate that they are more cost-effective and provide better value than inhouse counsel.
After demanding more for less, GCs don’t suddenly say “Hey, charge whatever you want as the crisis is over.”
Afterall the easiest way for GCs to show a return on investment is to provide evidence of year-over-year legal cost reduction.
AS GCs become more comfortable with the Axioms and the Clearspires, the Conduit Laws and the Cognitions and the gunnercookes, and the Adventbalances, more work will flow to them. Again, this is structural change, not cyclical. After using these firms, GCs will not, absent a bad experience, suddenly give all that work back to traditional law firms.
Will NewLaw get $10B+ deals? Maybe not, but how many $10B+ deals are there out there annually? I am sure NewLaw is quite happy to do 50 $500M deals rather than hoping all year long for that one $10B+ deal.
Then factor in that better processes and better technology are designed to allow fewer lawyers to do more work. Global law firms rely on their massive scale to attract work – but what happens when clients realize that the scale is no longer necessary?
As we know, better processes and better technology never go away – they are structural in nature, not cyclical. Kodak thought that the market would always want print photography – Instagram showed that the smartest guys in the room at Kodak missed the mark.
The march of technology, which is both relentless and ubiquitous. Each of these characteristics of technology reinforces the other, and generates tremendous cumulative impact. So, this from Joshua Kubicki:
While this thread covers much of the real-time debate and trends in the legal sector it is ignoring an underlying enabler that is fundamental to any change in any industry. Technology.
[…] A simple inescapable fact is that technology will and is quickening the pace of iteration in legal services. Notice I use “iteration” not disruption or revolution. The legal market is not, has not, and will not be the sole domain of lawyers. Lawyers do not operate in a vacuum with only their lawyer brains – they use tools. The tools of a trade are often a direct reflection of the maturity and capability of that trade. Tools are indeed part of the legal market – make no mistake. Westlaw and Lexis are players – not that I think they are long for this world. We tend to define legal services far too narrowly and look only inside business models to for innovation and disruption.
As the tools available become more powerful, efficient, and let’s use current jargon, ‘smart,’ so to will the services that the users of the tools provide. So also will the business models for tech and tools are not just for front-end use but are actually more fundamental to change when employed in the back-end of a business – see data warehousing, logistics platforms, and integrative financial tools. These back-end solutions are what drive pricing, resource management, and delivery flexibility – all key to law firms BTW. …
Axiom is often trotted out as a key indicator of NewLaw’s emergence and potential disruption. Where did Axiom spend a large portion of its $28m funding? Technology and tools. It is not so much that Axiom is doing anything new. It hires and provides lawyers to clients. What is new is the “how.” And how has Clearspire attempted to differentiate and grow? By investing in technology and tools? Look at the BigLaw players Seyfarth and Littler mentioned earlier. While it is challenging to learn what exactly these groups are creating and using (for good reason as it is their competitive advantage) we can look to the external market for signs of meaningful technological disruption.