December 20, 2017
Keeping Your Firm Relevant in a Changing Legal Industry
by Adam Shank, Tri-Rivers Educational Computer Association
For generations, the legal industry has weathered economic swings, cultural shifts and various other challenges with few, if any, structural changes. The practice of law seems to have a singular M.O. resistant to factors responsible for reshaping other industries. But that may soon change.
With a lead-in like that, one would generally expect predictions related to disruptive technologies or a cry for alternative fee structures. And while we should all be paying attention to the growing impact of tech and the asymmetry of our most “popular” billing models, that’s not what this article is about. Instead, I write today to talk auto manufacturing, amusement parks and why law firms should emulate them.
Allow me to set the stage a bit: research has shown that demand for legal services is on the rise. However, savvy clients have found various alternative methods of securing these services. In a strange paradox, the same studies that show demand for legal services going up, also show that the demand for legal services from traditional law firms is actually in decline. And how have the traditional firms responded? By raising prices of course. This should give pause to anyone who ever took Economics 101.
How and why is this possible? As legal futurist Ken Grady puts it: the “likely explanation is that the corporate law market is going through a period where the laws of supply and demand don’t function normally as the market adjusts to new competitive conditions. In other words, the market is going through a transition.” This begs the question: what happens when the transition is over?
If we acknowledge trends in changing markets, as well as the shifting expectations of clients and employees, then on-demand consumer-centric models and a new generation of law students are poised to reshape the legal landscape. Will these factors lead to the seismic upheaval experienced in retail and the like? I don’t know. Given the staying power of the legal industry I’d say probably not yet. However, I do believe that the coming shift will give adaptive firms an opportunity to gain a competitive market advantage. This is where auto manufactures like Toyota and amusement park operators like Disney come into play.
As these two industry leaders have recognized you are no longer competing with your peers in today’s economy; you are competing with anyone your client compares you to. The crux of the matter is, firms will no longer be compared solely against other firms. Therefore, institutions that can balance not only outcomes, but also client perceptions, will be in the driver seat.
Toyota developed a management system that has reshaped quality delivery and unlocked universally applicable problem-solving potential. Today we call it "lean." Disney is the gold standard in delighting customers and exceeding expectations while fostering customer loyalty, employee engagement, and profit. They aptly call it magic. At the heart of both, these companies have learned to capitalize on process and perception. They focus on both the measurable and the immeasurable in everything that they do. Firms should do the same.
As the paradigm goes: leadership excellence leads to associate excellence which leads to client delight which leads to business results. This requires a new operating system a-typical in the traditional firm setting. It is one that focuses on developing people. It is one that takes a systems approach to problem solving. It is one that focuses on value. And it is a system that is guided by unwavering and everlasting principles. I truly believe it will be the firms that can tap into this human operating system that will not only corner the market, but reshape the very practice of law as the market shifts.
The Columbus Bar Association is hosting five CLE courses on Achieving Operational Excellence; the first begins February 15.