Coffee, first introduced into the UK in the late 17th Century, was a revelation. Over the course of a few years people went from drinking beer with every meal to taking coffee. Instead of a depressant, with drunken side effects, people were imbibing a stimulant and it certainly invigorated the economy. Having tasted coffee and liked it the race began to establish plantations in Europe’s colonies. A new industry was born.
So how does this relate to the legal industry? Coffee was an innovation that changed the established order and I believe we will see the established order changing in the law industry over the coming years.
At our recent Executive Briefings we were privileged to have Dr Ian Pearson, a celebrated futurologist, to speak.
According to Dr Pearson a combination of virtualisation, miniaturisation, changing value chains, data assurance and cloud-based services will bring a whole range of new, ad hoc business models. These new models will encompass both the real and virtual worlds. As a result, they will not only generate new business conflicts but also increasing regulation, both of which are good news for lawyers that are prepared to develop specialist expertise in the relevant areas.
The importance of expertise is backed up by the Acritas Sharplegal 2012 survey - The European Legal Market: The Client Perspective, which was also presented at our executive briefing.
The research shows that throughout the life cycle of the law firm/client relationship, General Counsel values expertise extremely highly. And at two crucial stages it is by far the most important factor in their thinking – when they are selecting a law firm in the first place and when they are making a decision about whether they would recommend a firm to others.
There’s more good news from Dr Pearson too. Top people, those who can differentiate themselves through their knowledge and skills, will cost even more in the future. The implication is that lawyers and other professionals who rise above the crowd will be able to charge more for their expertise.
But the down side is that he believes globalisation will reduce the work of most people to a commodity and machine intelligence will erode the value of most commodity level skills.
Law firms need to consider the implications of this carefully. In the prevailing economic environment activities that can be commoditised will undoubtedly come under increasing price pressure and may well be the target of alternative business structures. To see what might happen you only have to look at how labour arbitrage has resulted in the huge growth of business process outsourcing firms in India and China over the last twenty years.
The key is to scrutinise carefully every process and activity that the firm carries out, and then decide whether it can be automated, carried out by more junior staff or perhaps even outsourced. “Firms that proactively undertake this exercise and invest in solutions to help them increase efficiency will make themselves both more competitive and profitable.
So what message should law firms take away from this? Technology continues to drive significant structural and behavioural changes in business and society, and law firms need to consider carefully how those changes could impact the established order. On the one hand they present opportunities for new specialisations, on the other hand firms need to scrutinise how they operate carefully. Simply put, they have to look beyond serving up the same cappuccino or latte that everyone else offers and innovate.