Today, we’re facing a supply-demand tidal wave that’s impacting the business of law. As an industry, we produce 30,000-35,000 new lawyers a year in an area of the economy that candidly is no longer growing.
In addition to flooding the market with too much supply, we’re producing very few hours of productivity right now. That’s not because there isn’t a demand for legal services, it’s because we’ve priced ourselves out of areas in the market with the highest demand. For the vast majority of clients (50-80%) billable hours and bespoke services are simply no longer needed.
This is the evolution of acknowledging that what we do as lawyers, while really important, has been turned into much of a commodity. 99% of legal has been done before and we should learn from the work product that others and we have created. This shift from a labor-based model to a knowledge-based economy presents huge opportunities for lawyers to adapt and serve more clients. Are there people who need custom wills and trusts? Yes, of course. But can 99% of the work be based on a well-produced set of documents that need limited customization based upon circumstances? The answer is yes.
The economy has fundamentally reinvented itself, not only as a service economy, but as an economy based upon leverage. We can expand our markets and lower the cost of goods we deliver by employing strategies and technologies that allow us to leverage the knowledge and work we’ve done and distribute it in a way that is more than just one-on-one. The real win-win for lawyers is if we can figure out how to cut the cost of legal services but at the same time leverage what we’re producing.
The reality is that general practitioners are a critical part of our profession and it’s becoming increasingly difficult to go out and learn on a client’s dime what it needs to produce a particular document for them. For example, if it’s going to take a general practitioner 10 hours to learn a subject wouldn’t a better option be to hire a freelance lawyer who specializes in the subject? In this way, attorneys can actually deliver services faster with less time invested resulting in a higher quality product.
The business model that’s thriving in this world is specialization. And, its specialization because lawyers can produce a better product faster with a better profit margin because they know what they’re doing. At the end of the day, billing a client two hours at $500 an hour is better received than billing a client 10 hours at $100 an hour.
Specialists for hire are joining freelance marketplaces like LAWCLERK where their services can be shared on a project basis. Instead of paying a specialist to work full-time, lawyers can share them with the rest of the marketplace and pay only when they’re needed. The goal is to keep profit margins for lawyers even or expand them while cutting the cost of legal services. By doing that we can grow the market.
As lawyers, we must let go of our inflated belief that what we do is custom and bespoke. If 85% of what we do is commodity work and 15% is customized, how can we reduce our cost structure and build efficiencies into the practice of law? As an industry, we must fundamentally look at new business models and technologies that can help us be more efficient and evolve the business of law.
Greg Garman, Esq. is a co-founder and CEO of LAWCLERK. He is also a founding member of Garman Turner Gordon LLP and has been consistently rated one of the top bankruptcy and business restructuring attorneys in the country. His practice is concentrated in commercial and corporate bankruptcy and restructuring. He regularly represents debtors, trustees, official committees, secured creditors and other parties in matters involving hospitality, lending, high tech, gaming, airlines and real estate, among others. He has an active legal practice that is focused on assisting companies with financial restructuring and business reorganization.
