A Perfect Storm

Many other industries have been radically changed by innovation, technological or otherwise. So why has law been seemingly impervious to the pressure to innovate for so long? 

The English legal market, dominated by law firms and barristers’ chambers, has remained largely unchanged for centuries. Law firms have expanded, followed their clients overseas and developed new practice areas to keep pace with modern business, but until recently their fundamental business models have remained the same.

The last decade, however, has seen a number of disparate pressures combine to create unprecedented potential for change. Economic boom and bust; globalisation; the rise of information technology; liberalisation of regulation and ownership structures; the development of outsourcing models in other industries; the inflexibility of existing legal models; and the inherent conservatism of the profession have together created a “perfect storm”, the effects of which are arguably only beginning to be felt. The law firms of the traditional profession are being forced to focus on their strategy as never before as more and more clients push them on price and ask them to differentiate themselves and their offerings more clearly from their competitors. Some are rising to the challenge; others manifestly not as once successful firms collapse or become the targets of takeovers. These pressures have also cleared the way for new models of legal service and new types of legal firm with very different characteristics from their more traditional rivals. They vary in their approach and proposition, but all are seeking to bring innovation to a field long unaccustomed to it.

Many other industries have been radically changed by innovation, technological or otherwise. Think of the industrial revolution, the advent of mass production in consumer goods, the globalisation and disaggregation of manufacturing and the myriad sectors and services being transformed by the internet. It is undoubtedly the case that the personal nature of legal services has made them less susceptible to some of the revolutions that have swept other industries. Law, in almost all its forms, is about people applying their time and intellect to produce something largely intangible. A document may be drafted, but the value is in what the paper means and achieves – the rights and obligations it creates – and not in the paper itself. The physical element of the production is merely consequential.

Legal services are also often co-created, particularly in the commercial arena. Contracts are negotiated, cases are settled and the final position is a result of both parties’ input, with neither party having full control. Even where lawyers are producing something for a client without any other party involved (for example, drafting a set of terms and conditions) the output is generally bespoke and tailored to the client’s requirements, without much element of standardisation. In contrast to many other industries, there isn’t a product or service that is developed by a supplier as a general offering in the market that can simply be purchased and consumed.

All of this has meant that law, even in the biggest and most sophisticated firms, has remained something of a cottage industry. Of course, firms have precedents and in some cases sophisticated document assembly technology, but law is mostly the application of what’s in people’s heads – their own judgment, style and approach. There are clearly market norms, but give two lawyers, even from the same department in the same firm, the same task of marking up a clause, and you will get two different results. Lawyers are, in their own words, “wordsmiths” – highly skilled craftsmen, but craftsmen nonetheless.