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How did we get here?

The state of the legal industry in 2018

By Alice Armitage | @theprofarmitage

What skills did we all learn in the first year of law school? We mastered a new vocabulary, deciphered the principles of legal writing and analysis, determined how to analyze sometimes fascinating judicial decisions and, from all the above, figured out how to spot legal issues presented by any given set of facts. We learned how to “think like a lawyer.”

Those skills are all necessary to the practice of law, but they are no longer sufficient. Today’s clients are looking for more than an expert who interacts with them at the beginning of a matter and reappears with a lengthy memorandum and a bill based on an opaque timekeeping system. In this model, the practice of law requires very little interaction with the client, yet the client must be willing to pay whatever it takes to get the expert’s advice.

Unsurprisingly, this model of practice is eroding as competition among law firms has increased, as clients seek more value from the legal services they need, and as alternative legal providers take over more and more of what was traditionally undertaken by firms in the delivery of legal services (but is not technically the “practice of law.”) New technologies are contributing to the speed of this erosion.

To illustrate where that places the traditional business of law in 2018, consider where the taxi industry was in 2008. At that time, urban taxi drivers could also be considered to be the suppliers of an expert service. Only those that could pass difficult tests of expertise (London is famous for the test cabbies must take, called “The Knowledge,” which takes 2 to 4 years of study to master) were allowed entry. Once admitted into the industry, competition was further limited by regulations that restricted the number of taxis on city streets. (Not so different in effect than the requirement of the bar exam and state bar rules that limit who can engage in the practice of law.) The needs of riders in the city were not being met, but the taxi industry didn’t listen to their clients, even when private livery services began to skim off some of their ridership. It wasn’t until Uber and Lyft began meeting client demands for the majority of riders that the bottom fell out of the taxi industry.

In order for the practice of law to avoid similar collapse, attorneys must rethink the ways in which they meet the needs of their clients. If taxi drivers had listened to their riders complaints and suggestions (more taxis, a manner of getting a ride other than hailing or going to the drivers’ location like a hotel), cleaner cars, nicer drivers, etc.), they might have prevented Uber and Lyft from dominating their industry.

So what is it that clients are increasingly seeking from their attorneys? Savvy customers and corporate legal departments are looking for value from their lawyers. According to a 2017 study, clients around the world are seeking attorneys who are able to enter into strategic partnerships instead of transactional engagements. Clients want a holistic business relationship in which there is transparency and collaboration in the delivery of legal services, as well as the possibility of advice on management and operational issues.

Innovative companies such as Uber and Airbnb may go further, including asking outside lawyers to weigh in on ways to use the company’s data to craft strategic advice and to offer guidance on how to change the legal landscape, particularly regulations, to make it more company-friendly. These types of clients also seek connectivity and integration by using digital tools to facilitate collaboration. Unexpectedly, while these tools may help to reduce the manual review of documents or research of case law, they also put an emphasis on human relationships. A lawyer must still remain independent while collaborating with the client as a strategic partner. That is a difficult task because it requires lawyers to navigate the difference between the needs of the client and providing advice that is in the best interest of the client’s business. But as said by Katrina Johnson, associate general counsel and head of legal for Asia-Pacific for Uber, about the lawyers she hires, “I want to be tested on stuff; I want to be challenged; and I want legal advisors to have that arm’s length approach – but I also want you to get where we are going and what we are trying to solve, to encourage us to think about things more creatively.”