The following is the 3rd part of a 4 part post expanding on my short introduction to an ILTA session entitled, Do Robot Lawyers Dream of Billable Seconds? If you have not yet listened to the full session (and you have nothing better to do for the next 90 minutes), you should go listen to it now. If you would like to download and read the entire 4-part post you can get it here.

What does this mean for legal service delivery?

The examples above are not directly comparable to the
legal services we provide. I deliberately did that to illustrate the 6 Ds
concept before completely confusing the issue by describing how it applies to
our industry. As it is, I’m sure more than a few of you have read the examples
above screaming, “Yes, but that has nothing to do with us! What the hell are
you talking about?”

I am more than willing to concede that I may be wrong
about the legal industry passing a threshold of digitization in any way similar
to the entertainment industries or physical goods manufacturers. Or, that
Diamandis may be wrong about industries passing that threshold and then
necessarily conforming to his exponential framework. But for the sake of
argument, let’s say that Peter and I are not wrong. We are definitely passing a
threshold, an industry wide digital disruption will eventually take place, and
we will begin to conform to the exponential framework just as others have. That
begs the question, what does a dematerialized, demonetized, and democratized
legal services industry look like, and how could a law firm survive in it?

The Dematerialized Practice of Law

It’s likely that the first complaint against applying the
6 Ds framework to the practice of law will be that we are not a material
industry, and that we therefore have a distinct advantage over manufacturers or
sellers of things. We don’t produce material goods, unless you count mountains
of documents, and even if we become entirely paperless there will be no change
in our service.

That might be true, but let’s think about a service
provider who has already gone through this digital threshold: travel agents.
Travel agents still exist of course, although in nothing like the numbers they
did 20 years ago. They provided a service, with almost no material aspect and
yet they were one of the first industries to be decimated by the rise of the
internet. It turns out most people were happy to book travel themselves as long
as it was easy and inexpensive. How many people or companies would gladly
handle their own legal services if they had access to resources and knowledge,
for a low price, and they didn’t actually have to deal with a real live
attorney?  If such a thing were possible,
how many attorneys could the industry continue to support?

The Demonetized Practice of Law

We have seen downward pressure on legal prices since the
downturn of 2007.  That has mostly come
in the form of clients demanding discounts on hourly rates or fixed fee
arrangements. But suppose clients, even large corporate clients, had a new option:
they could pay a monthly fee for unlimited access to a firm sponsored set of
expertise engines that handled much of their routine legal needs. They could
pay month to month for this a la carte service, or they could sign a 2 year
contract which also entitled them to steeply discounted hourly rates for legal
services not covered by the engines. Setting aside for the moment, whether such
a thing is possible, or more to the point, whether the bar associations would
allow it, what would that do to legal service prices?

The Democratized Practice of Law

This is the good news, if the prices of legal services
decline precipitously and the delivery of legal services becomes much more
widely available, then the pool of potential clients will be significantly
larger than today’s client pool. Smaller companies and individuals who
currently choose to do without external legal counsel and instead turn to
LegalZoom or other form providers, could suddenly be approaching big firms to
handle their legal needs.

Some of you are thinking, “But that’s not the kind of law
we practice, we do big law for big corporations.” To which I will respond, look
around you. The era of the big corporation is ending. The average lifespan
of a company
on the S&P 500 has fallen from 60+ years in 1960 to just
over 15 years today. There will probably always be some big corporations, but I
don’t think they will be the norm.

Relatively small companies like AirBnb (600 employees) and
Uber (~1,000 employees) are taking on much larger and more traditional service
providers, and they are having success. AirBnb and Uber are valued at $10Bn and
$15Bn, respectively. These are new types of companies that grow quickly, by
connecting people who have services to offer to those who need them, and taking
a percentage. This is relevant to us on two fronts: 1) If given the choice of
monthly subscription fees for access to legal engines or more traditional legal
services, which do you think these startups would choose? AND, 2) How long
before the law firm equivalent of AirBnb or Uber start selling them these

(Tomorrow: What does an Exponential Law Firm that can survive in this type of environment look like?)

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Photo of Ryan McClead Ryan McClead

Ryan is an executive at a small, but well-known legal technology company. Prior to his jump to the vendor side, he served for 3 years as Legal Technology Innovation Architect at Norton Rose Fulbright, running Technology Innovation projects around the world. His sense of humor and remarkable tolerance for verbal and psychological abuse has gotten him through more than 15 years in Legal Technology. In 2015, McClead was named a FastCase 50 recipient, and in 2018, he was elected a Fellow in the College of Law Practice Management. In past lives, he was a Knowledge Manager, a Systems Analyst, an “IT Guy”, a Fashion Merchandiser and Theater Composer.