As a kid I was always very fascinated with Charles Darwin and his Theory of Evolution. That is why something written by the late Jan Glidewell, a columnist for the Tampa Bay Times, resonated deeply with me – “You can clutch the past so tightly to your chest that it leaves your arms too full to embrace the present.”
This directly correlates to a phenomenon taking place in the legal industry today, specifically pertaining to consumer transactional work (meaning document drafting/review, business formation, trademark filings, etc). There are a number of reasons why this is occurring, but if transactional lawyers do not start unclenching their grip on the ways of the past, they are in danger of facing a massive extinction.
It’s no secret that lawyers are known for their stubbornness and unwillingness to admit defeat; hell, it’s part of the reason they are so good at what they do. However, sometimes in order to win, you must know when you are out-matched, accept it, and adapt for the future. And if history has taught us anything it’s that a species’ unwillingness or inability to adapt will result in its extinction.
Only the strong survive, and for thousands of years, lawyers have been among the strongest of species. Fast-forward to the 21st century. Technology now rules the world, and will continue to do so until it has taken hold of everything. Assembly lines are now made up of mechanical arms and conveyor belts. Things people thought unimaginable 50 years ago are not only conceivable now, they are reality. So why should the legal industry be a safe haven from technology?
Darwinism centers on the survival of the fittest. Are transactional lawyers the most fit to survive in the current environment? Maybe. Are they the most fit to survive in the future? Almost certainly not. It takes me back to my original statement that lawyers are so good at what they do because of their stubbornness, but that stubbornness will ultimately spell their demise as a species. Clients have already begun to make their choice on how to get their legal needs taken care of – and using a lawyer is becoming less and less attractive.
Clients now, more than ever, have options to circumvent the need to use a lawyer. These lawyer substitutes are not only faster and cheaper, but they tend to provide a better overall customer experience (disregard whether the clients realize they are legally less protected by using these types of services).
‘The LegalZoom Effect’
If you want to make a lawyer cringe all you have to do is mention the company LegalZoom as the way you handled your legal work. Most lawyers think LegalZoom is ruining the legal industry. Regardless of the merit of that statement, clients are turning more and more to lawyer-substitutes in a phenomenon I call the ‘LegalZoom Effect.’ The statistics speak for themselves. In 2011 over 20% of all LLCs in California were formed using LegalZoom, and that number has certainly grown since then.
People are now more okay than ever using a website, mobile app or any other kind of technology to resolve their legal issues. The problem for lawyers is they are unwilling to get with the times, and they are about to get left in the dust. They continue to cry to one another that their work is better than using technology (which I 100% agree with) while making little-to-no effort to change the way the ‘game’ is played.
Lawyers continue to charge exorbitantly high fees while giving little-to-no transparency regarding the total costs of their services. Would you rather use LegalZoom to form a corporation for a flat fee of $99, deal with a friendly customer service department available 13 hours per day and get your documents delivered to you in a nice leather binder, or alternatively, use a lawyer who charges $350 per hour, will only give a rough estimate of the total cost, delivers the document as a simple attachment to an email, take sometimes days to respond to your emails and phone calls and then charges for those responses?
The answer is simple. Today, if you give most people the option to avoid using a lawyer, they will. There is a reason that 90% of LegalZoom customers say they would recommend the service to friends and family. It is because in a time where our lives are overly complicated, the LegalZooms of the world make our legal issues disappear (for the short term at least) with the simple click of a mouse and the swipe of a credit card.
Adapt or Become Extinct
In the next 5 years transactional lawyers are going to face a tipping point where they have to decide whether they want to continue to be stubborn and be replaced by technology, or adapt and survive. If lawyers embrace technology, they could make their practice both more affordable, more seamless and create a better overall customer experience. Lawyers need to start acting more like the businesses they are competing against and less like the uptight, suit-and-tie clad legal counselors of the past.
In order to combat the LegalZoom Effect, lawyers will need to focus on two main aspects of their practice (both of which LegalZoom excels at): How they charge clients and Customer Service.
How Lawyers Charge
The legal industry might be the first industry in the history of humanity where an over-supply of a service or a commodity has yielded a dramatic increase in prices. From 1970 to 2005 the number of lawyers in the US more than doubled. According to Forbes, from 2000 to 2010 law firm hourly rates also doubled at major metro big law firms!
In what world can we say a 100% increase in supply should result in a 100% increase in prices while demand has basically stayed the same? Something must be done about prices if transactional lawyers are going to keep up with these more affordable services!
For some reason, in the year of 2014, many lawyers still insist on sending normal invoices and requesting payment by check. Yes, you heard me correctly. They want you to send them a check in the mail.
Not only that, but many lawyers still insist on billing hourly, even for straightforward tasks such as filing a trademark or forming a business entity. In a world where businesses are modeled by excel spreadsheets, people value predictability. The best way to scare away a client is to tell them you are unable to give them a firm price quote for your services. The age of the billable hour is certainly on its deathbed and it’s clinging to the ventilator. Transactional lawyers, like LegalZoom, need to charge a flat rate for the majority of services.
The most important thing that the majority of lawyers lack is good customer service. They oftentimes feel overwhelmed with work (which is their fault for taking too much on their plate) and take forever to return phone calls and emails, if they get returned at all. Lawyers act like a service and that’s it. If a lawyer won your case or delivered you a document you asked for then they have done their job and done it well, right? Wrong.
If Starbucks delivers you a delicious cup of coffee via the hands of a rude employee does that mean you enjoyed your experience? Not even close. No matter how good that coffee is, if you didn’t enjoy your experience, the likelihood of you looking for an alternative method of finding your coffee is high.
Lawyers have to understand that, in the eyes of the customer, the only competitive advantage they have on these existing and emerging technologies is the personal touch. Lawyers need to spend more time talking to you (without necessarily charging you for it) and act as your business partner, not just work-for-hire.
Lawyers have to start acting like businesses and not only provide good customer service, but deliver their end-product in a way that makes clients feel like they got what they paid for. It is easy to resent an invoice…lawyers need to make it hard to resent them as people.
They say that mother time heals all. The problem for consumer transactional lawyers is their time is running out. You can only fight natural selection for so long before you become replaced. Eventually the scales will tip in favor of technology and most transactional lawyers will be replaced all-together if something doesn’t change.
Now, this prediction might be a little extreme in that lawyers will likely always exist in some capacity. But the system as we know it will eventually be replaced with an easier consumer experience driven by technology that allows legal matters to be resolved faster, cheaper, and with fewer headaches than ever before.