Small Law Firms, Solo Practitioners

If You're Average, You're Probably Going Out Of Business

If you’re in a small firm, you should be scared as hell after reading this.

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Keith Lee

Keith Lee

“Good enough” is dying.

“Good enough” was never really good enough of course, but plenty of people were able to get by with it. Lawyers included.

Good enough work meant that lawyers were able to make clients adjust to their demands and schedules. Good enough work meant that lawyers don’t have to worry about the presentation or delivery of their services. Good enough work meant that lawyers didn’t have to bother with competing on price.

Lawyers were able to get by with “good enough” much longer than other industries as the practice of law is an eminently local business. Law vary from state-to-state. Municipalities have their own ordinances. Judges impose their own local rules for their courtrooms.

Beyond that, lawyers, and the law, are largely opaque to most people. People don’t know how to choose lawyers. They might know they have a legal problem, but they don’t know how to find the appropriate legal solution.

As such, many lawyers have been able to coast by on good enough. As long as competition was local, and information on the law obscure, then there was not much impetus to improve beyond good enough.

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The Fastest Lion And Slowest Gazelle

A few days ago, I wrote about how you better be running when you wake up every morning:

The 21st century is an era of hypercompetition. Any business that wants to compete must not only be doing well by their own standards, they have to be doing better than everyone else as well. A few points from Consultant’s Mind:

  • The average S&P 500 company only lives 18 years.
  • 90% of profits only go to the top 20% of companies.
  • 2015 was a record year for mergers and acquisitions.

What that should communicate to you is that many businesses are consolidating. The world is indeed becoming flat. The internet, computers, and deregulation have shifted competition from local to global. Businesses no longer compete with businesses down the block, they compete with Amazon and AliBaba.

While the legal industry generally lags behind the rest of the world, hypercompetition is coming for lawyers as well. U.S. law firms are consolidating at a record pace. Venture capital firms continue to invest into technology companies attempting to “disrupt” aspects of the legal industry. Businesses, consumers groups, and others continue to push for the deregulation of legal services.

John Trimble of Lewis Wagner, a former DRI Director, recently told me:

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The leaders of LegalZoom and Avvo told us that their mission is to make access to justice possible for as many people as possible. They concede that they do not want the top one percent of the legal market, nor do they want the bottom fifteen percent of the hopelessly poor. However, they view the roughly eighty-five percent in between as fair game. Indeed, they cited a recent report by LawMediaLabs, Inc., that estimates that there is an untapped “latent legal market” worth annual fees of $45 Billion.

If you’re in a small firm, hell, if you’re in a firm of almost any kind or size, that should make you concerned scared as hell. Let me translate it for you if you can’t read between the lines:

Two companies with national reach and millions of dollars in backing just said they’re coming for your ass.

Second Place Is The First Loser

Sometime in the next 10 to 15 years, there is going to be a lot more more competition for providing legal services. You won’t just compete with lawyers down the road, you’ll compete with companies and lawyers on the other side of the world. $45 billion is a big pie, and everyone wants to a take as big a bite of it as possible.

It won’t only be Legal Zoom and Avvo — other companies are going to join them. Remember that part about 90% of profits going to 20% of companies? Who is going to take the biggest bite:

  • Lawyers doing good enough work?
  • Lawyers delivering above average work?
  • Companies using technology to deliver legal services in a streamlined and efficient manner, while at a low cost?

It’s not going to be the first option when there is a wide array of choices offering cheaper and better services. The majority of the pie is going to go to the latter two options. And there is going to be little in the way of scraps for the “good enough” lawyers to pick over.

That’s not to say that lawyers are going to be cut out of the action. Lawyers providing above excellent service will still do well. These lawyers develop experience in their field, stay abreast of case law and statutes, and build strong connections with their clients and industry.

But what about when “good enough” lawyers are gone? When all that’s left are above average lawyers, and multi-national corporations attempting to consume the legal industry?

The spectrum of what constitutes “good enough” will change. Excellent legal service will no longer be enough. Clients will expect more. They’ll want excellent legal service and streamlined delivery and competitive pricing.

What Type Of Lawyer Are You?

We’re increasingly transitioning towards a winner-takes-all economy. There will be fewer players, but the competition more frenzied and intense.

  • That means above average lawyers, smart lawyers, need to stay abreast of changes in technology and the industry (not being cheerleaders for it).
  • Smart lawyers will look for new means of delivering legal services — client portals, secure apps, assisted self-service.
  • Smart lawyers will look for new means of communicating with clients — blogs, social media, video conferencing.
  • Smart lawyers will look for efficiencies and best practices for their offices — case management software, computer-assisted document assembly, ediscovery software platforms.

But I want to emphasize again that these things are all just tools.

Shiny new tools are all fine and well, but you also need the requisite knowledge of how to properly use and understand such tools. It’s one thing to say, use a saw to cut a tree limb, quite another thing to use a saw to amputate a human limb. The tool is the same, it’s the knowledge of how to use it that makes all the difference.

In the end, smart lawyers are still going to be the ones with the knowledge.

P.S. Speaking of tools and knowledge, on February 22, 2016, I’ll be speaking at GSU School of Law in Atlanta, GA, about legal blogging. It’s open to all law students and lawyers. I’ll be joining Scott Greenfield and Above The Law alum Brian Tannebaum. Maybe a special guest appearance by Mark Bennett, who is arguing in front of the Georgia Supreme Court that day. If you’re in Atlanta, don’t miss out.

Keith Lee practices law at Hamer Law Group, LLC in Birmingham, Alabama. He writes about professional development, the law, the universe, and everything at Associate’s Mind. He is also the author of The Marble and The Sculptor: From Law School To Law Practice (affiliate link), published by the ABA. You can reach him at keith.lee@hamerlawgroup.com or on Twitter at @associatesmind.

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