There Could Be Blood

by Tony Wilson

Any lawyer interested in the future of the legal profession (and more poignantly, whether they’ll have a career in a decade) should be reading Richard Susskind’s The End of Lawyers?: Rethinking the Nature of Legal Services. It suggests a future that ain’t pretty for those of us who are practicing, especially those of the solicitor persuasion. To paraphrase a few of Susskind’s horsemen of the apocalypse (and to embellish with one of my own), law firms must commoditize and repackage their services to lower their costs, or their services will become an unaffordable luxury. Secondly, law firms will outsource more and more legal and paralegal work to India to reduce costs, (and maybe clients will too!). Third, shrinking corporate budgets will force in-house counsel to create online closed communities among competitors to avoid sending work to more expensive outhouse counsel. And finally, because the Internet has made it possible for clients to buy an imperfect contract on the web for $99.95 that a lawyer might perfectly draft (but charge $10,000 for), some lawyers may find they are the equivalent of buggy-whip manufacturers in 1902.

There could be blood.

In some ways, why on earth should the legal industry be any different from the buggy whip industry, or more recently, the CD business? The CD business was decimated by free online downloads until my pal Steve Jobs re-invented the model for iTunes. Amazon changed the way we buy books, making “brick and mortar” bookstores an endangered species. Craigslist re-invented the classified ad. Google has made the yellow pages obsolete. And with the Seattle Post Intelligencer abandoning a “print edition” of their paper in March of this year, watch for a slew of other newspapers either folding or going totally online; the rationale being that if you can read any paper in the world on the Internet for free, why on earth would you pay for a subscription?

As for the work solicitors do, if a client on a limited budget can’t afford $10,000 or $20,000 for the “perfect contract” that I might (ever-so-humbly) draft, he might consider downloading his contract off the Internet for a song, as if it were a song! Or a book. Or anything else you can download these days; taking the risk that the downloaded contract will protect him “just enough” (and that “something” is better than “nothing”). Or the client might decide to have his expensive contracts prepared in India for $1000 by a lawyer or paralegal (who may have been trained in North America). In short, if lawyers aren’t careful, we might be the slumdogs and some enterprising corporation in Mumbai might be the millionaires.

And although litigation might not take the same hit as solicitors in Susskind’s Brave New World, everyone in the profession will have to get used to things such as “legal knowledge engineers” and legal procurement departments shopping out the work just like we had to get used to email and voicemail in the 1990s (the reliance on email being totally predicted in Susskind’s last book on the topic, The Future of Law).

Perhaps one solution to avoid the same fate as the buggy-whip and CD industry is to free law firms from the crushing burden of salaries and rent by going “virtual” with those lawyers who don’t really need the “real estate” of a traditional law firm. As a franchise lawyer, I tend to see everything as a potential franchise. Maybe the future law office looks a little more like a REMAX or CENTURY 21 office, (though without those hideous jackets).

Let me explain, using my own practice as an example. I don’t need a physical office in downtown Vancouver. My clients are all over Canada and the U.S. and I’ve only met 20 per cent of them face to face. All my advice is either provided over the phone or delivered by email over the web, and that includes the expensive contracts I (humbly) draft. Armed with a laptop, a wireless Internet connection and a cellphone, I can anchor my sailboat in English Bay on a nice summer day, and draft any letter or document from the foredeck. Or I can work from my home office and not waste time commuting to and from the marina! Or I can work eight weeks a year from Argentina, like a colleague of mine currently does. And as many of us know, sometimes we can get more work done in four concentrated hours outside the office than eight hours in it, unburdened by administrative interruptions, meetings and distractions.

Lawyers fortunate enough to have their own practices don’t always need the bricks and mortar that a traditional law office requires. But there are four things we do need. First is the brand, image and name recognition that comes with a large established firm. Second, we need the “back office” personnel who word process, check conflicts, open files, send bills, cut trust cheques, manage the payables, collect receivables and do all the administrative work that isn’t “legal work.” Third, we need to be able to give the legal work that we don’t want to do (or shouldn’t be doing) to other qualified lawyers or paralegals in the “firm,” and get credited for it somehow. And finally, we need meeting rooms once or twice a week, in case a client really wants a meeting. It’s not for everyone, but allowing certain lawyers to practice “remotely” will free up office space for those lawyers (presumably litigators) who truly need the bricks to launch their mortars.

Costs are lowered for the firm because “remote lawyers” (let’s call them “iLawyers”) won’t have the same “real estate” needs that other lawyers have, and the law firm can either reduce their rental space accordingly (and save money), or hire other lawyers in the traditional manner who need the space. The iLawyer’s overhead will be much lower and that’s worth something to the iLawyer in terms of compensation. Likewise, use of the firm’s brand and back-office by the iLawyer is worth something to the firm.

So I think the future law office could look a little more like a franchise, where a firm’s brand and administrative support are “licensed” to independent lawyers who will actually pay the firm an initial franchise or license fee for the right to become one of their lawyers. The iLawyer won’t have an office per se, or benefits, or even a “salary” and will have to pay insurance and everything else as an independent sole practitioner would pay, except rent. All legal work generated by the iLawyer using the firm’s brand would be billed and collected through the firm, whether the iLawyer is in Argentina or on a sailboat. And the law firm will take some percentage of the iLawyer’s cash receipts as an ongoing “royalty,” reducing some of its leasing costs in the process. Better yet, to balance their lifestyles, iLawyers can work as hard as they want, whether from Argentina or their sailboats.

Although there are variations of the “all cash-in deal” or “percentage of cash-in” deals in many law firms, I’m not aware of any firm using the “franchise model,” where real estate is taken out of the equation and the firm charges an upfront fee for a lawyer to actually work there. But whether it’s a franchise model or cash-in model, the key concept here is that some lawyers don’t need the “real estate,” but they need the brand and the back-office administration that comes with a larger firm. Lawyers who can practice remotely (and law firms who are prepared to do creative deals) may “change the game” enough to survive and thrive. I suppose we’ll know in 2010 when the Olympics shuts Vancouver down and most of us will have to work remotely anyway.

When an industry is confronted by monumental change like lawyers seem to be in this economy, the industry either shifts the paradigm like iTunes did or it runs the risk of sharing the fate of the CD business, the book business, and oh yeah… the buggy-whip business.

By the way, I bought Susskind’s book on Amazon.ca, because it wasn’t in bookstores when I wanted to buy it, it was cheaper and I didn’t have to venture outside in the rain to look for it. That may be prophetic about the future of our profession.

Vancouver Franchise Lawyer Tony Wilson practices at Boughton Law Corporation in Vancouver, and has written for the Globe and Mail, Macleans Magazine and Canadian Lawyer. twilson@boughton.ca | www.boughton.ca/people/lawyers/tony_wilson

This article was published in the April 2009 issue of BarTalk. © 2009 The Canadian Bar Association. All rights reserved.