When lawyers come together to discuss the future — in law firms, law schools, bar associations, etc — the conversation inevitably turns to clients. Although this is a wonderful and redeeming impulse, it almost always results in confusing and unsatisfying dialogue that goes nowhere. Why does this happen? Because lawyers focus on their detailed knowledge of trees and lack awareness and humility regarding the full breadth of the forest.
The tool pictured above is a 2×2 matrix of the US legal market. Its purpose is to decode lawyer over-generalizations about clients.
- The horizontal axis is client type (a typology presented in Post 005). Clients range from individuals (Type 1) to Fortune 100 clients with large legal departments (Type 6).
- The vertical axis is adopter type based on the Rogers Diffusion Curve (presented in Post 007). Roughly 1/6 of the market falls into the innovator/early adopter categories.
The colored rectangular area reflects the universe of legal clients. Orange denotes one-to-one consultative legal services (aka traditional legal services); dark blue signals that at least some one-to-many legal solutions are taking hold. See Susskind, The End of Lawyers? (2010) (introducing one-to-one and one-to-many terminology). The light blue border represents clients who have innovation awareness — i.e., they know such innovations exist and are evaluating adoption. See Post 008 (discussing time gap between “knowledge awareness” and “adoption decision”). I have done my best to make each area unit roughly equivalent in dollars and adopter-type percentage.
In the above graphic, the vast majority of the US legal market is orange. This means most legal problems get solved by clients consulting with lawyers and lawyers fashioning a custom solution. This is the methodology we teach in law school. It is also the paradigm for Model Rules of Professional Conduct.
Blue will grow, Orange will shrink
Regardless of the current breakdown, the dark blue is destined to grow and the orange is destined to shrink. There is nothing controversial about this statement. See Post 001 (discussing legal productivity problem for individual and organizational clients).
What’s uncertain, however, is the pace of change. If you’re running a law school or law firm, or investing in NewLaw or legaltech, your success or failure depends upon your timing. This is pure business risk, which drives lawyers nuts. Fortunately, diffusion theory provides some insight.
Type 1-3 clients (left side)
More than 50% of the dark blue is clustered in the top-left of the graphic (the personal services portion of market). Also, there is a vertical line that delineate Type 1-3 clients from Types 4-6. Clients to the left of the line (individuals, business owners, and companies with a solo GC) have relatively simple adoption decisions — one person decides based upon personal factors. See Post 008 (discussing how rate of adoption varies by decision type).
For Type 1 and 2 clients, the most prominent example of a one-to-many solution is LegalZoom. Many customers became aware of LegalZoom through mass advertising on NPR, commercials during Shark Tank and Law & Order, or internet banner ads. In fact, since January, I have come across 33 different LegalZoom banner ads (Google has me pegged). Lawyers and law professors may snicker at the lack of perfection in a LegalZoom form, but there is zero doubt this company understands lifetime customer value better than anyone else in the legal market. LegalZoom’s influence is growing like an oak.
The solo and small firm bar has other sources of one-to-many solutions, including sophisticated document management and automation systems. In most cases, the goal is to enable high-volume practice. Indeed, legaltech started over 30 years ago when solo and small firm lawyers sought out better ways to solve the legal problems of ordinary people.
Side note: Although legaltech has been a tremendous help to the clients of solo and small firms, the biggest bottleneck to access to justice is a labor-intensive adversarial system. See, e.g., Post 042 (cost of litigation outpacing amounts in controversy); Post 037 (PeopleLaw sector is unraveling). We need a redesign of how we resolve disputes.
Finally, why is there no dark blue underneath Type 3 clients (i.e., companies with one in-house lawyer)? Type 3 clients generally have problems too complex for a kiosk service like LegalZoom, yet their budgets are relatively small and their numbers too few to create a scalable market. As a result, Type 3 clients are destined to wait the longest for one-to-many solutions.
Type 4-6 clients (right side)
On the right side of the graphic is a second dark blue cluster. This is mostly Type 5 and 6 clients investing in legal operations. If you attended the 2018 CLOC Institute in Las Vegas last month, you witnessed a stunning number of companies offering one-to-many legal solutions. The conference had nearly 2,300 attendees, with more than 2/3 drawn from the vendor side.
Remarkably, despite this impressive showing, we remain in the early days of legal department innovation. During the opening session, CLOC’s CEO Connie Brenton acknowledged that 1/3 of the Fortune 500 was present, leaving 2/3 as future members. Further, a substantial subset of corporate legal department attendees were there to learn how to do the basics of data, process, and technology. A handful of companies have emerged as legal ops innovators, such as Cisco, Adobe, HP, NetApp, Google, ADM, and DCX, with substantial horsepower coming from leading NewLaw vendors like Elevate and UnitedLex. We are barely scratching the surface of future change. The potential is staggering.
That said, Type 4-6 clients are heavily constrained by the adoption decision process. Unlike Type 1-3 clients, where one person makes the buy decision, legal departments have to be much more deliberate. In theory, the general counsel presides over the budget and has the authority to spend it. Yet, GCs have many items on their plate. Therefore, decisions regarding legal department systems are often delegated to a lieutenant. Because systems are not part of a lawyer’s formal training, the lieutenant has to climb a learning curve. Once an adoption decision is made, successful implementation will likely require major investments in change management. Cf. Post 008 (discussing prevalence of “massive passive resistant (MPR)” in corporate legal departments); Post 047 (emphasizing need for strong leadership to successfully implement law firm scorecards). This can strain the relationship between the deputy and GC.
It is indisputably true that there is growing pressure on legal departments to do more with less. This is why CLOC membership has doubled year-over-year since 2015. Yet, because of decision-making and implementation challenges, the pace of transformative change remains uncertain.
Confusing conversations — an illustration
Let’s imagine we attend a law school alumni event and the dean asks for advice on how to prepare students for the future practice of law. The graphic below reflects some of the perspectives in the room. All of them are based on experiences with clients.
Lawyer A has a very optimistic story to tell, as he has implemented sophisticated workflow, project management, and document automation solutions to more efficiently and profitably serve his PeopleLaw clientele. This describes the practice of my former student, Jordan Couch, who practices at Palace Law in the Seattle-Tacoma metro area. Go Jordan!
Lawyer B serves an older and more affluent PeopleLaw-small business clientele. She plays attention to legaltech developments but, as yet, does not feel a need to substantially change her practice.
Lawyer C is older than A and B and practices in the corporate middle market. He has little idea what Jordan is talking about and assures the dean and the faculty that law remains a noble profession.
Several lawyers from Law Firm D are at the gathering, including a young partner enthused about her use of AI to better serve an innovative and cost-sensitive client. “Through tech, we’ll spend less time on scut work and more time practicing at the top of our license.” An older partner from Law Firm D thinks this is errant nonsense. His clients are overwhelmingly late majority. He knows nothing about diffusion theory and seldom reads books. Finally, Law Firm D’s beleaguered managing partner is also an alum. He is struggling to navigate the disparate views of his partners. He tells the dean to prepare students “for a lifetime of change,” though he provides no specifics.
Finally, the richest lawyers in attendance work at Law Firm E, a white shoe NYC firm focused on financial services. None of the lawyers from Law Firm E have ever heard of CLOC. Some junior associates, however, are intrigued by the idea of automating all work that keeps them at the office past 2 am.
Creating T-shaped legal professionals
Law faculty attending the alumni event have a wonderful opportunity to hear what they want to hear. That is unfortunate.
When it comes to dark blue one-to-many versus orange one-to-one, legal education needs to see the forest from the trees. This means embracing the concept of T-shaped legal professions. See Post 043 (discussing the Institute for the Future of Law Practice). When the content and quality of one’s legal education enables a law grad to pack dramatically more value into an hour of work, everyone wins — clients, law schools, alumni, the organized bar, and broader society. Our job is to survey, evaluate, recommend, and adapt, not to wait around for the guidance of lawyers immersed in practice.
I hope my decoding tool helps the cause.
What’s next? See Legal Evolution graphics, Year 1 (049)