Much chatter lately has been devoted to, “Whither Uber?” Is its famous unicorn valuation justified and defensible? If it can’t, or shouldn’t, continue to give its middle finger to regulatory authorities on every major continent, will its growth slow or even reverse? How bad is it—that is, should we all uninstall the app—because it seems to have a record of short-changing its drivers, furtively tracking its users, and hiring star talent that just may have brought 14,000 purloined files with him? Is its (now we are learning) caustic and misogynist internal culture a fundamental business challenge or “merely” a PR nightmare?
Most of this strikes me as gossip-meets-the-business-pages, with perhaps a bit of schadenfreude fuel behind it as well.
But as I’ve reflected on the larger question of “whither the auto industry?,” I’d like to believe that we might learn something about the future place of law firms in the “whither the legal services industry?” debate by thinking about Uber’s strategic and competitive posture vis-a-vis the other major players in that arena.
Let’s step back and agree for purposes of what follows that the existential issue for the auto industry, and all the planets circling it, is whether people will want to continue to own their own cars. Or is all people really want “personal transport on demand, 24/7?” According to the AAA, American drivers spend on average about 45 minutes/day behind the wheel; meaning if they own their own car, it sits idle about 97% of the time: Pretty low utilization for what’s typically your second most expensive purchase (after your home).
We’ll bypass what are for purposes of today’s piece second-order issues such as whether pure plug-in, hybrid-electric, or yet another generation of the durable internal combustion engine, will be the centerpiece of future powertrains. That’s less important to you and me (while admittedly of surpassing importance to car engineers and CFO’s) than whether we will prefer to buy-and-own or rent/subscribe to-and-summon our “mobility services.”
Stipulating that a large proportion of us will opt for “services” over our own little bubble of steel and glass, which category of companies that’s out there today is best suited to sell those services or to most quickly grow into it? Uber? The traditional car companies? Google? Tesla? A combination of two or more of the above?
To figure this out, I’d like to introduce the notion of “the harder competence.” This is my own coinage standing for the notion that if providing a product or service requires competence in a couple of things, the company(ies) furthest along in developing and optimizing the harder, or hardest, of those competencies are best positioned to win the day.
You could think of it, and I would invite you to do so, as a special case of the familiar notion of a barrier to entry.
Now let’s imagine how it might apply to the “mobility services” industry of 2025 and which category of incumbents today is best set to be at the core in the future. At the very least, mobility services that one could rent or subscribe to will require distributed fleets of cars, preferably autonomous, and an app to summon them, enter information needed to select the proper vehicle (no micro-urban Smart car if you’re moving furniture or taking five friends along for the ride), meter usage and collect payment, record feedback, keep you up to date on progress during your trip, etc.
Which is the harder competence?
Obviously, to me, it’s managing fleets of vehicles: Designing and building, delivering, maintaining, financing, enhancing and upgrading, refurbishing or replacing, insuring, repairing, refueling, cleaning, inspecting, garaging, and on and on. The app will have to be slick, intuitive, and inviting, but when all is said and done it’s just an app. So far, Uber’s entire business model is premised on staying as far away as possible from getting involved with providing cars; making all the functions I just listed a “core competence” would require Uber to submit itself to a top-to-bottom rethink and relaunch. (Meanwhile the incumbent car companies could and would be refining their veteran skills at fleet management—remember that nothing in a competitive market is a stationary target.)
And how does this bear on Law Land, you ask?
It’s congruent in important ways with the so-far-mostly-hypothetical debate over whether the Big Four represent a serious threat to law firms. Consider:
|Function/expertise||Law firms||Big Four|
|Ideal type of work (hat tip to David Wilkins)||“Bet the company”||“Run the company”|
|Role of sheer legal talent||Core: must be nurtured and catered to||Commodity-ish; can be hired or rented|
|Business process optimization||Foreign language spoken at pidgin level if at all||Core competence; decades of experience|
|Client continuity||Ad hoc; often dependent on individual personalities||Systematic; handoffs planned for and built in to the system|
|Client portability||Partners hope so!||Not a chance; system precludes it|
|Client visibility into firm’s work||Opaque||Transparent|
This is meant to summarize, and as summaries will to some extent simplify but hopefully not caricature, the systemic differences between how law firms and the Big Four approach their work.
Now, what you view the “harder competence” to be depends on what you think clients are gravitating towards. If you believe everyone still wants to own their own car, as far as the eye can see, Uber and car manufacturers can still co-exist; indeed, they help each other in serious ways. But if you believe “mobility services” is really where the market demand is heading, Uber, I would argue, has a perhaps existential problem.
For law vs. the big four, the same reasoning might apply. If clients will for the indefinite future care first and foremost about super-high-end, truly thin-air work, law firms have little to fear. But if you think those are lightning-strikes occasions and the 24/7/365 demand is for “running the company,” the big four have got the harder competence—operational excellence and continuous process improvement—nailed.
The final question, as with many decision points in life, has to do with will and conviction.
Could law firms hire the same business professionals to optimize their internal processes that the Big Four have? Of course; it’s a free country. Might they want to? After all, it would require lawyers to be subservient to the MBA’s and flow-chart geeks. You can answer that for yourself at home.
And do the Big Four really and truly want to mount an assault on the citadel of Law? Perhaps the NSA has an ear into their boardrooms, but I certainly do not. I have the strong suspicion, however, that the answer to that question will be more determinative of the threat they do, or do not, pose to our so-far-walled garden. I have no doubt they could overrun our fortress with shocking alacrity if they chose to. But what is their secret desire and their honest choice?
Is anyone going to mention the “C” word? It’s not like we have 200 large law firms solely so American Lawyer can publish a cool list every year. Last I checked, law firms have whole departments devoted to conflicts analysis, must often pass on lucrative opportunities due to small, merely perceived conflicts, and are often sued for alleged transgressions any way. Not to take anything else away from an otherwise fine analysis, but I think we need another row in that chart, no?