10/11/13

Not So Fast ...

Image [cc] fbpa.wayne
In the 19th century one of the big business revolutions was the adoption of a new technology called "Railroads." Of course when railroads were first proposed, two things happened. The first was a general uprising from the establishment about why this was a bad idea. This push-back came from those you would expect - the ones with a financial interest in keeping things the same way.
Although the first railroads were successful, attempts to finance new ones originally failed as opposition was mounted by turnpike operators, canal companies, stagecoach companies and those who drove wagons.
The second reaction was an "irrational exuberance" over the potential profit to be made and the speed at which change would occur. Mass quantities of speculative dollars were thrown at building rail lines from here to there to everywhere. Which of course resulted in much lost money when change didn't come that fast.

Obviously railroads did not fail in general. I understand we still use them. But what did happen? It took about 50 years for railroads to fully embed in the US economy. From then on, this new way of doing business was considered business-as-usual. So instead of a quick revolution, change came about incrementally over a much longer period of time.

In the 20th century something similar happened with TV, only the commercial adoption was shortened to about 20 years. This highlights the accelerating rate at which new technologies are being adopted. For tablets, I think it was 3 years - although I just made that stat up.

The obvious conclusion, according to this history and everything I read about BigLaw, is that we have about 10 minutes left before BigLaw collapses and the Phoenix of the New Normal rises. By the time you come back from the bathroom, it will all be over.

For those of you who followed my suggestion and are now back, you will notice my predictions were proven false. Not much has changed.

As an alternative, I suggest the revolution in the delivery of legal services will take a bit longer to occur. Now I am not suggesting it will take 50 years. But I do suggest it will not come as fast as many might predict. We all know things need to change. And many see financial opportunities in that change, as they well should. However, I have been feeling a bit of irrational exuberance lately about how this will all play out.

So don't look for BigLaw to collapse or for new-style providers to sweep through the market in short-order. Instead watch for steady, incremental changes in the way law firms function and deliver their services. Next generation providers will continue their growth, law firms will merge and things will generally keep changing. Much like the railroads, change will come, just not all at once.

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5 comments:

Ryan McClead said...

Change always takes longer to get here than you expect, but when it happens, it happens faster than you would otherwise believe possible.

I agree with you Toby, but I don't think the slow pace of change is an opportunity for firms to rest on their laurels and wait to see what transpires. We need to be prepared to take advantage of any number of changes that could catch in the near future. If not, we won't be in a position to react fast enough when the pace inevitably increases.

This might require it's own blog post. Hmmm...

The Last Honest Lawyer said...

I guess this puts me in the New Law camp with Dr. George Beaton. We both just wrote posts (buff.ly/19fh8Vv - mine) (ow.ly/pIA0B) that posit that we are in, or near the latter stage Ryan mentions - the tipping point has occurred and things are about to happen "faster than you otherwise believe possible."

Axiom and Novus are growing at leaps and bounds and they are getting loads of exposure with BigClients, while a few BigLaw firms are beginning to experiment with LPM.

Recent news also has BLP (Old Law) 2012/13 PEPP down 40%, while its Lawyers on Demand (New Law) service is up 28%. Look for much more of the same in the near future. And I applaud Akin Gump for now proactively teaming up with Novus on some matters.

Unless BigLaw can somehow pivot to become more like their competitors, they will go the way of the Dodo faster that @aricpress (http://bit.ly/17jQCZ3) or @gnawledge have predicted.

P.S. @jordan_law21 wrote an unbelievable comment to Dr. Beaton's post. Should be a standalone piece.

The Last Honest Lawyer said...

I forgot to mention that the New Law camp is having a barbie on the beach, drinking great wines from the Barossa and Napa Valleys, and its amazing to see the smiles on the faces of the newly invited BigClients doing the lambada in their Hawaiian shirts. Good times! All are invited...

George Beaton said...

I am pleased to join this fray Toby. The technologies of our times are vastly different to the steam engine era. All product life cycles are shortening. Decades are now years. And years are months. The internet><society interplay has taken charge. Most of BigLaw IMHO is playing King Canute.

George Beaton said...

Toby, forgive another comment. I have quoted this post of yours here in a thread on the rise and rise of what are terming the NewLaw business model:
http://www.beatoncapital.com/2013/10/rise-rise-newfirm-business-model/
Regards

 

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