Two Visions of the Future Law Firm
What will we see in the law firm of the future? It is a question Richard Susskind considered more than a decade ago in his book, "The Future of Law," and again in last year's book, "The End of Lawyers? Rethinking the Nature of Legal Services." With the economy what it is, Susskind is far from alone in considering this question, as two recently published articles underscore.
In The Philadelphia Inquirer this week, Larry E. Ribstein tells business writer Chris Mondics that law firms have yet to figure out the model that will get them out of the economic mess in which they find themselves. Ribstein, a professor of business law at the University of Illinois College of Law and author of a blog that focuses on business law, Ideoblog, says that their response so far -- cutting costs and discounting rates -- is not a cure.
"My theory is that big law firms don't have a coherent business model," Ribstein says in the article. "From a client standpoint, why would you pay so much per hour for a lawyer who works for a big firm vs. [a lower rate] for a lawyer who works for a smaller firm? What value does the big firm add?"
Instead, firms need to take a far more creative approach.
One he suggests: Law firms might raise capital from investors. That would provide firms with lower-cost financing and make them answerable to investors. But before that could happen, of course, there would have to be changes in the legal ethics rules that bar such arrangements.
In another recent article, 2020 Vision, published in National, the official magazine of the Canadian Bar Association, lawyer and writer Mitch Kowalski imagines a speech delivered in the year 2020 by one Nancy Kwan, the CEO of a professional law corporation, upon being named Canada's legal CEO of the year. She talks about the elements that have made her firm a success.
She sums up the firm's approach as "better, faster, cheaper." To get there, the imaginary Kwan explains, the firm made changes in four key areas:
- Structure. The firm eliminated individual ownership and rights and created a separate and distinct corporate entity that did away with consensus decision-making and replaced it with a board of directors.
- Overhead. The firm outsources as much as possible, including legal research, document preparation and due diligence.
- Knowledge management. The firm's KM director is a member of its executive team and KM is an integral part of every lawyer's workflow.
- Billing. All fees are fixed and agreed on with the client before the work is done. If the firm fails to perform as promised, its fee is reduced.
This imaginary firm of the not-so-distant future, of course, reflects what some innovative firms of today are already instituting. As Ribstein suggests, for firms to find a business model that will work going forward, they need to think creatively.
Posted by Robert J. Ambrogi on August 13, 2009 at 01:45 PM | Permalink
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