Will COVID-19 really change the legal?

What lasting impact would the pandemic have on how law firms deliver legal services? Would anything profoundly change in their business model? Will the billable hour finally go away? 

Richard W. Smith discusses these and suggests what needs to happen before the real transformation could take place. Seemingly, it feels like the change we are witnessing now is merely superficial.

Richard totally nails the problem with claiming we are seeing a long-term change in law: how are the incentives changing? https://t.co/7fjUP3Qo4w

— Alex Hamilton (@AlexHamiltonRad) April 13, 2020

What is really different this time?

RWS: To this end, I have seen (and read) articles that I would not think possible three to four months ago written about:

• the changing nature of remote working in the profession, and
• the importance of Zoom/Skype and Microsoft's Teams,

to name but a few.

But I want us to stop here, take a step back, and ask: "Is this likely to be the long-term outcome?"

When I ask this, keep in mind that this is a profession that has fought tooth and nail to keep to the same business operating model for over 30 years (if not 100) despite having already recently lived through one of the worst global economic downturns of all time (the GFC).

What can we really say is different this time?

For sure, we can say we have given our business continuity plans (BCPs) a tough workout. And, to be fair, I'd bet that even the most conservative of BCPs didn't factor in a COVID-19 event.

And while we now know that most of our workforce can work remotely and, ironically enough, with the use of timesheets, we can also claim that they remain 'productive' whilst working from home.

However, does this truly foreshadow a change in the manner in which the industry is going to be managed?

I agree with @AlexHamiltonRad + @RWS_01
I too hear many saying covid crisis will change #BigLaw
But none elucidate the causal factors
Even if demand drops, say 15%, creating excess capacity… I think we will see some firms dissolve. Not seeing what will change the biz model

— ronfriedmann (@ronfriedmann) April 13, 2020

Are these changes enough?

My take? 

While all of the above is true, it takes place in circumstances most of us had not predicted. Moreover, many of us feel uncomfortable being in said circumstances. I'd bet there are very few people out there who are happy being locked up at home for four weeks - family or no family.

But this is a far cry from saying we will see the dawn of a 'new normal' whenever normality returns.

Yes, understanding our purpose is now more critical than ever. Likewise, we cannot hope to survive if we do not look to find the solutions our clients seek and need. These solutions will evolve, but in a post-COVID-19 world, these will not necessarily bring about a change to the structure of how a law firm operates.

My long and strongly held view is - to see the real evolution of the business model of law, we need to start with how we incentivize and reward our partners and employees.

And to start this process, we need to begin to truly align our firm's internal incentives/rewards to those of our customers so that we can create value for them. In short, our incentives/rewards must align with our customers' needs and incentives.

So far, I have read (tens of) thousands of words on how COVID-19 will change the legal profession. I yet have to see authors suggest, or even discuss, the above issues.

If not, what else should the legal do?

My take from all of this is this:

If we want what we are currently going through to be truly more than a mere 'stop-gap' solution, if what we want from a post-COVID-19 world is a real structural and ongoing change in the profession, then…

We need to start to have a conversation about how our system of rewards and incentives is broken. And right now is the time to be having this conversation.

Impact of this crisis may take time to cascade. Changes to business model will be second- and third-order impacts. Some early q's: when/how courts return to normal, business development in social distancing era, rise of remote work/depos, etc.

— Justin G. Castillo (@telecomattorney) April 13, 2020

Changing incentives is just a start

CL: Incentives are indeed at the core of everything a law firm does. If you reward your staff by the hour, you are likely to transpose those costs "upstairs" right to your clients. And thus the clock and legal billing revenue would become the sole obsession.

And if the only effect, as Ron suggests, is that a few law firms “go under” due to a drop in demand for legal services, we may fail to see any real legal innovation from the late majority.

(legal entrepreneurs are, of course, a different story)

Biglaw governance needs an update

As Daniel Acevedo pointed, if law firms want to thrive, they need to address their internal functions and roles. 

The problem is - as long as law firm partners are, at the same time, service team leaders, shareholders, and heads of their business development, no change can truly take place. 

Diversity is key, but so is accountability. 

Imagine running a  company where you are in charge of sales, production, tech implementation, brand development (and much more). What you lack at that point is accountability.

Business development in the digital age

One of the implications would undoubtedly be in the sphere of Business Development for law firms. Namely, the legal profession is known to enjoy face-to-face networking, something which is likely to change in present circumstances. 

What could be done differently? 

#bizdev in soc-distancing could easily mimic the #SaaS digital marketing which had been out there for a good while.

All the blueprints are out there

— Ivan Rasic (@Ivan_Rasic) April 13, 2020

For example, lawyers and law firms may need to turn more to digital marketing to build their pipeline. And some could say that lawyers have been on social media for the past two decades. And they would likely be right. 

However, in times when global demand contracts, lawyers would need to do much more than post tweets, write LinkedIn posts, or post answers on Quora.

These, of course, help, but law firms would have to go even beyond. Lawyers will have to be much more strategic about how they spend their time, how, and where they focus their efforts.

Without going into many details (this is a subject for a separate article), law firms would need to start from the top in their business development efforts.

This means stepping back, rethinking law firm products or services, and then setting a digital marketing strategy according to your primary target group.

Once you have everything set, and once you launch your novel digital business development arm, you need to make sure you are following and measuring all the relevant metrics. That is the only way to learn if your efforts yield expected ROI.

Will we see more legal digital products?

I feel the natural step for leveraging the Internet, digital marketing, legal tech, and get to scalability are digital legal products. But will we see more of them?

And aren’t we all already used to the convenience of technology? Why would it be any different in the legal sector? The trouble is, there may not be many adequate products at the moment. But once there are, there will be no coming back. 

Just ask anyone to cancel their Netflix and rent a DVD.

Why would Biglaw want to reinvent?

Some commentators on Richard's article suggest that the biglaw business model would change only as the second (or potentially third) order impacts.

I could very much see that happen. 

The truth is, we are not aware of where we are heading right now. Unemployment across the board is unprecedented for at least a few decades back. Some are even drawing parallels with the Great Depression (let's hope for the sake of the whole world they are wrong).

So downsizing, as Ron Friedmann suggested, could be a knee-jerk. Some firms could go under, while other firms buckle up, hoping that the first-wave drop was the final one. 

And if they are wrong?  

The evolution has to go beyond remote

To come back to Richard’s initial argument - 

Legal services will need to much more to satisfy future demand. It may be murky right now. However, IF the crisis prolongs and starts causing cascading effects, law firms wouldn’t avoid turmoil either. 

If the main takeaway in these times is that we can trust colleagues to work from the comfort of their homes, well… We’ve got much much more to learn still.