The commodities business
Post-Clementi, solicitors must adapt to the concept of legal services as commodities that can be promoted by non-lawyers or face a bleak future, Professor Richard Susskind tells Rupert White
Commoditisation is not a word that lawyers are used to hearing. It is not a word the public is used to hearing. But it is a word that will become increasingly applicable to the legal profession, and the underlying concept already informs much of the way we shop and consume, whether we know what it means or not.
Commoditisation is also at the heart of Professor Richard Susskinds vision of the future of practising law, as he warned at his speech recently at the Royal Society in London for the Society for Computers and Law (see  Gazette, 16 March, 11). Lawyers are correct about worrying about the economics of commodity pricing, he said, because when a legal offering becomes a commodity theres a good chance its going to have to be given away.
Prof Susskind is IT adviser to the Lord Chancellor, and is widely regarded as a visionary when it comes to legal IT, his 1996 book, The Future of Law, having first propelled him to that status. He says his recent comments were not hyperbole, to prick back a few ears if anything, he was understating the position.
Because lawyers work is an information product that can be increasingly replicated and distributed for almost no cost, customers expect to pay ever less for it. For certain categories of law and legal service, Prof Susskind maintains, it is a matter of embracing this commoditisation or going bust. For others, the air up on the high ground will just get that little bit more rarefied.
For those who genuinely do bespoke work, and that covers a lot of barristers, the future is much like the present if were looking 20-25 years ahead, he tells the Gazette. But this is not the market the majority of lawyers in the UK will be in, and the warning he has for most lawyers today is brutally clear.
I think theres going to be an evolution of services from bespoke to commodity I know many law firms find the notion of providing a commodity as anathema; thats not what they do. But if Im right, you may indeed see some firms failing to survive because they try to hang on to the old model. The dominant way in which most law firms impart legal guidance remains the same as Bleak House and well before.
Prof Susskinds idea of what the long run means varies often, but he says that those law firms doomed to oblivion may well read the writing on the wall within 20 years.
Time enough, some might say, for people to adjust to these changes gradually, to follow the cart. But the pressures of commoditisation will make our current ideas of some modes of legal practice redundant.
The commoditisation of the legal profession has been dubbed supermarket law in anticipation of external ownership of law firms, but this is inaccurate because the supermarket model is just one form of commodity business, Prof Susskind says.
Supermarket law for me is the idea that it becomes packaged or commoditised by a non-legal provider. The big thing post-Clementi is that no longer will lawyers and law firms have pre-eminence, or certainly entitlement to pre-eminence, or dominance in the delivery of legal help and solutions. Prof Susskind says he finds the basic notion of supermarket law quite attractive, partly because of the investment and the technology capability that a supermarket, for example, can provide. But, he says, I do think actually its more likely to be banks and others who provide quasi-legal services that complement the traditional services.
The shift in banking towards diversified virtual banks such as the Co-ops Smile, Prudentials Egg and Halifaxs Intelligent Finance represents not only the way financial companies might muscle in on high-volume, low-margin legal business, but also the way existing personal injury and conveyancing factories might diversify in the future. Both these possible futures are based on the same thing knowledge as a commodity product that can be packaged, tailored and sold by non-legal people.
A great deal of the service and processes that underpin even a first-rate banking service do not fundamentally require human involvement they can be systematised. What one needs is an interface that can bring that process that has been systematised to the customer.
The same thing can happen in legal businesses, says Mr Susskind. The interface traditionally between the non-lawyer and formal sources of law has been the lawyer working in the office with books, procedures, colleagues and so forth. That interface is gradually going to change and a lot of the work that was undertaken by the lawyer can be standardised, systematised and provided to the end user. It seems to me there are innumerable [legal] circumstances that can to some extent be replaced by systems and the friendly human being.
And this future of law might well contain far fewer lawyers. The other big business issue is: if that is the case, to what extent need it be lawyers that put that into place? Even more strongly, its not really in a law firms interest to put that interface in place, because their vested interest is in a different sort of interface. Mr Susskind says his money is on the new interfaces coming from entrepreneurial small players or major organisations that recognise that what is done in legal practice is something they already do knowledge processing with a friendly interface.
If were really honest, in most law firms, when a client comes through the door, theyd actually prefer something thats a stonking great dispute or transaction that will involve a team of people, and I think there is a fundamental tension between what it is that a client wants and what it is that the lawyer wants. That is a huge commercial tension, and I dont really see an analogy in the retail world where the interests and desires of the customer are far more clearly aligned.
I would say that the law firm that actually becomes as passionate as the client about saving money and doing things quickly and cheaply in a simple way will be the law firm that will immediately benefit. Competitive advantage will arise for a law firm that doesnt just say its client-facing, but actually is.
It is this commercial thinking that is the future of much legal practice. In the commercial world, the retail industry [for example] has worked in reverse. [Companies] were very keen to get the technology out to the customer. They backfilled and improved their systems, their stock control systems, their warehousing, logistics and so forth, but whats interesting is that in retail the first step is get a system that adds value in front of the consumer and, in a sense, in the legal market its the reverse.
I think theres a fantastic lesson here for law firms. Their focus should be what can we use technology for that can enhance the client-service experience? rather than saying how can we use the technology internally?
And if law firms do not actively seek to understand these possibilities? If you find yourself in a practice area which you can imagine, hand on heart in the small hours of the morning when you wake up in a cold sweat in bed thinking about it, that actually what I do is highly process-based and I can well imagine that being systematised if you can conceive of it being systematised, I think it will be systematised.
When I think of my sons, they dont want to be lawyers but some of their friends do, and they come to me at 17 or 18 years old and say what kind of profession can we expect? and I can sketch out with some confidence that much of what goes on today in the legal world will continue over the next five or ten years. But if Im looking 20 or 30 years ahead, I find it unimaginable that a great deal of legal work wont become commoditised and a great deal of lawyers will be doing either different things or not legal things at all.
Does this mean that lawyers be out of business in ten years? Well, actually over the last three to four years we have seen important law firms go out of business, but will the entire legal profession crumble in the next ten years? Not a chance. Over the next 20-30 years will we see seismic changes? I think yes, we will.
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