Lawyers are ill-prepared for the massive changes engulfing the practice of law, says George Beaton.
One sign of the rapidly growing influence of the online world is LinkedIn announcement last month that it had reached 200 million members worldwide. Yet partners in law firms are regularly heard saying: “I can’t understand why people ask me to connect on LinkedIn; shouldn’t I just ignore them?” This limited view of LinkedIn as a business development tool is but one reflection the ill-preparedness of law firms for the onslaught of the online world.
LinkedIn is one social medium that is rewriting how business is conducted. Law firms are not immune to these changes. It’s with whom you are connected that interests others, usually more than who you are. Connections are the basis of networks, networks fuel openness. And openness lubricates business through speed, zero or very low marginal costs, and transparency. And, crucially, by also fostering trust.
Big changes afoot
While the digital revolution has been slow to reach parts of the business-to-business world, including the traditional professions, big change is afoot. Being able to transact online means clients can access information and professional services from many more providers, anywhere, any time and at a lower cost. TripAdvisor and Amazon are now household names that have wrought disruption in their industries. Check out LegalZoom and RocketLawyer: these are services for consumers and small business. Those for larger ones, like Clearspire, are already here–and more pure online plays are just around the corner.
Only work of a trusted adviser nature will be left for firms to deliver in traditional ways. And trusted adviser services constitute probably no more than 20-30 per cent of the work firms do. The earnings of firms delivering commoditised services will revert to market levels – and that’s a lot lower than partnership profits. In less than 10 years these effects will be widespread. Traditional equity partner profits will fall as online service delivery innovation takes hold.
George Beaton is Executive Chairman of Beaton Research + Consulting and a Partner in Beaton Capital, firms dedicated to professional services.