No Option for Law Firm

I read an article in The Lawyer at the start of August that I’ve been meaning to blog about for a while. The article was about mid-sized regional firms opening small London offices. Not in the Millennium style of wanting to join the big law firms with a plush London office, but in the “let’s nick their work” mantra of a competitive market. The idea being the London office would be more a sales office to drive work to their regional offices where the work could be done more cheaply. Thus undercutting the costs of their London based mid-tier rivals.

I posted back in early 2010 how I thought that the mid-tier would be where the real competition and innovation would start to take place. I can’t believe how little we take advantage of geography in our own country, I recall working for a utility in Yorkshire who eventually got taken over by a southern rival. Rather than locate the head office with associated costs to the cheaper northern headquarters they kept the more expensive southern base. Same goes in legal, how many London law firms still locate their IT functions in the capital? I blogged about this too in 2011 and still no major shift has happened.

The Legal IT revolution and innovation in business process within law firms in my view will remain a talking point in conferences whilst there is no movement in simple innovative cost savings. However maybe these regional upstart neighbours  shaking up the London mid-tier will finally be the start of the revolution we’ve talked about since 2008?

I read my copy of Computing magazine today and the comment section caught my eye. It was an article entitled “Focus Resources on what really matters” by Martin Butler, the basic premise is that IT has become caught up in a drive for efficiency at the expense of business success. In the current “economic climate” there is of course a natural tendency for cutting costs, corporate IT departments are usually large cost centres and thus are prime targets for cost savings. 

It reminded me though of an article I read some years ago about the shift of IT to a utility function akin to the railways or electricity companies (IT Doesn’t Matter by Nicholas G. Carr published in the Harvard Business Review). The premise being that these businesses “open opportunities for forward-looking companies to gain strong competitive advantages. But as their availability increases and their cost decreases – as they become ubiquitous – they become commodity input”.

These are opposite views of IT, one as a continuing driver for business growth and one as a driver for business efficiency and cost savings.

Now, I’ve started reading Richard Susskind’s “The End of Lawyers?” and I’m currently at the point where he talks about “technology lag”. This is the lag between two forms of technology: data processing and knowledge processing. The former (data processing) he puts as the “use of technology to capture, distribute, reproduce and disseminate information.”, the later (knowledge processing) a “set of technologies that help us analyse, sift through and sort out the mountains of data that we have created and helps make them more manageable.”

Richard Susskind points out that we are between these two forms of technology, in law firms I agree. And I think Martin Butler’s view of the IT function is the one that will facilitate this move and be able to supply the “Knowledge Processing” in law firms. I’m afraid that Nicolas Carr’s IT function will give us very efficient and cost effective departments that are stuck in “Data Processing”! It’ll be interesting as we climb out of the recession which law firm IT departments become.

I caught sight of this article “Free! Why $0.00 Is the Future of Business” in The Spectator. It suggests a new business model where the product is free, the consumer gets the product for nothing and the business makes its money elsewhere. This is especially prevalent online where the thought of paying for things you would in the “real world” are, well, crazy (would you pay to read your quality daily newspaper online? conversely would you expect the paper copy of your quality daily newspaper free?).

The Spectator points out that the business model isn’t necessarily that new, but what is new is it’s less a marketing trick to get your product out there but a new economy, in the words of the Wired article :

Once a marketing gimmick, free has emerged as a full-fledged economy. Offering free music proved successful for Radiohead, Trent Reznor of Nine Inch Nails, and a swarm of other bands on MySpace that grasped the audience-building merits of zero. The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multiplayer online games. Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411.

In the UK an ISP revolutionised the market in the early days of the internet boom. Traditionally (before broadband) you would pay a monthly fee for your ISP and then your phone calls on top of that. Freeserve came on the market and dispensed with the monthly charge, making its money from a proportion of the call charge. Within a year it had grown to 1.5m subscribers and changed the market forever.

So my question is can this business model be translated to legal work?

From a consumer point of view I remember buying my first house in 1995 and getting the conveyancing for nothing (thanks to the builder).

But could a law firm really offer services for nothing?

Could we every get to the point that the knowledge systems in law firms become so good that a simple search could trawl thousands of precedents and cases in a firms KM (Knowledge Management) and DM (Document Management) systems and bring you back the agreements that could be used with virtually no partner/associate billable time. Meaning very low costs that could be covered elsewhere (e.g. by adverts)?

I imagine the response now is “Don’t be stupid!” but then I’m sure if I stood in “Our Price” or “HMV” music stores 20 years ago and said “in the future you’ll be able to get every record and tape in this store in far better audio quality, for free!”

I’d had said the same thing back then “Don’t be stupid!”. And now we have Spotify!

The whole music and film industry against “the internet” is getting a little ridiculous. From the Pirate Bay trial (follow it on twitter) this week to the Davenport Lyons debacle (yes, debacle! a friend of mine got a letter and the one piece of evidence? An IP address, I mean come on!)

Through following Stephen Fry on twitter I come across this law being put into effect in New Zealand. From what I can tell a section of this law will allow “for internet disconnection based on accusations of copyright infringement without a trial and without any evidence held up to court scrutiny”. Basically if you’re accused, your internet connection is taken down!

Find more details at http://creativefreedom.org.nz/

I don’t even think the whole copyright theft or illegal file sharing is the root issue. I think it’s the fact that the music industry and film industry know they were too late to the internet party and rather than use technology to innovate they got scared and decided to use what they know, the law.