Bloomberg Law
July 25, 2016, 7:28 PM

Legal Industry Should Wake Up Before it’s Too Late (Perspective)

Raymond Brescia
Associate Professor Law

Editor’s Note: The author of this post researches the legal industry and its workforce.

The legal industry is facing what Harvard’s Clayton Christensen calls the “Innovator’s Dilemma.” Disruption in the delivery of legal services caused by advances in technology is threatening incumbent legal services providers.

For the time being, companies like LegalZoom and Rocket Lawyer are delivering more affordable and convenient services, on the “low end” of the legal services market: perhaps taking clients from some firms, but also probably creating a market where one did not exist before because the people turning to such outlets may not have had the resources to pay for a lawyer in the first place.

If Christensen’s theories hold true, however, should the legal industry ignore those companies and others coming on line because they are infiltrating a market segment most in the industry do not serve, they should sleep with one eye open. When incumbents ignore such upstarts, before they know it such companies have figured out how to serve a larger and larger share of a market until they displace the incumbents entirely. Think about what Netflix did to the video rental industry or how the so-called mini-mills took over the steel industry.

There are potential upsides and downsides to this disruption. Millions of Americans and small businesses can gain access to some form of legal assistance where they are now being priced out of the market. One of the questions for the disruptors, though, is whether they are providing a legitimate substitute for a lawyer, whether the services that are being offered in a commoditized, often automated way, can deliver value to the customer that is worth even the reduced price.

There is a risk that bad legal help can make matters worse: mucking up a patent application; missing important deadlines; or overlooking critical legal issues that a competent, diligent, attentive lawyer would catch. New forms of delivering legal services can expand opportunities where they do not exist now. Recent law school graduates could find work providing services in innovative ways. Clients who would otherwise go without assistance can get representation.

But they also pose challenges, for clients, the legal profession and the community as a whole.

Facing these challenges, the legal profession must get down to business. Lawyers will have a choice. Can they ignore the changes afoot in the legal industry or adapt to them, figuring out where they can best add value and how they can compete with the disruptors? It will likely require a blend of sticking to their guns and making sure some of their clients appreciate the value that a carbon-based lawyer brings to the lawyer-client relationship that is superior to the functioning of a lawyer made up of bytes and bits.

They will also need to learn to deliver more value for less money, figuring out where they can offer lower-cost, routine services in a commoditized way at volume (the way LegalZoom and others are doing it), while still providing customized, full-service representation when the client needs that level of assistance.

This will require not just embracing the technologies that make delivering some form of legal assistance in efficient and effective ways, to deliver value at low cost to the client, but also making the case for the traditional way of doing things, showing clients how that is the best way to protect their interests in situations of high risk, where one should not leave the legal work to a form-filling robot.

Even this traditional way of doing things will have to change, however, as lawyers will have to deal with even more cost-conscious clients and price-cutting competitors and will have to turn to approaches like value-based pricing as opposed to the typical practice of hourly billing.

Innovative lawyers can work alongside innovative technologies in making the strong case for the legal profession’s continued relevance and to highlight where lawyers still add important value through their work.

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