The Internet and the Practice of Law - Web Counsel Presentation

THE INTERNET AND THE PRACTICE OF LAW Keynote Address to Pace Law Review Symposium March 20, 1998 White Plains, NY Part 5 of 6

Some suggestions for practicing law in the Internet Age

How to handle a more efficient practice - The technology paradox of more expenses to install technology which results in lower billable hours is not really a paradox, if you do not invest in technology you will be left behind. Your clients demand email and the universal TCP/IP Internet protocol allow your your computer network to easily interface with your client's computer network. Your client will know much more about what you are doing and firms have the ability to learn much more about what their clients want to do. Efficiencies lead to lower costs per service and competition will quickly result in lower revenues from each service. Firms have two options, provide more services to increase revenues from each matter or use the lower services costs to attract move clients.

Enhance your services - Simply knowing what your client wants to do will be very useful, but it also gives you the ability to enhance your services; to provide your client with what they need sometimes even before they know need the information. Basic processing of information should be done by computers not lawyers. Things such as organizing a corporate subsidiary are relatively easy to automate, yet many firms are still getting letters or faxes from clients and marking up prior documentation by hand. Enhancements need not be limited to only automating process paper processes. Re-engineering processes to take advantage of new technologies is even more cost effective than simply automating a manual process. In addition, technology gives each firm the ability to provide new and different services to clients, such as the Daily Deregulation Newservice and the On-line Discussion Group at Deregulation.com [a site created by Web Counsel for Robinson & Cole].

Favors larger firms with a greater variety of specialist - Automation has tremendous economies of scale, but comes with significant up-front cost. Creating sophistacated systems for only a 10 or 20 transactions a year rarely makes sense, so such service enhancements favor larger law firms that regularly perform the same service. What the Internet does is to greatly lower the communications and integration expenses of such systems, resulting in huge number of opportunities to automate, re-engineer and disintermediate such processes.

More clients - The other way to maintain profitability is to charge less, but get enough new clients to make up for the reduction in revenues from lower fees. Legal services are hard for clients to evaluate so simply reducing prices while maintaining or enhancing services will not necessarily get the firm large numbers of new clients. Many clients may well assume that high cost services provided by inefficient low-tech firms deliver high values (the handcrafted model). One way to explain the complex subject of how technology enhances services is to use the firm's website as Womble Carlyle Sandridge & Rice, PLLC has done on their website by posting an article from AmLaw Tech highlighting their technical expertise. The website also gives the firm the ability to reach more potential clients to tell them about this message.

Favors boutique approach - Smaller firms that can deliver specialized services will be able to compete against larger firms if their technology is comparable, since their overhead costs should be lower. In many cases, boutiques firms will be able to do substantially better than larger firms, particularly if there intimate knowledge of the area and efficient use of technology allows them deliver services at substantially less costs than less efficient firms with higher overhead.

Have to market better (Legal Marketing Association) Firms of all sizes are going to see ever greater competition as firms more commonly competer across state lines, as other businesses compete for a variety of "legal" work and clients have greater knowledge of firms costs and efficiencies. Insurance companies have been so good at squeezing costs from law firms that average billable hour paid to law firms has sunk dramatically, but even at such low hourly rates many firms are profitable.

Competition - Lawyers are competing with one arm tied behind their back. Ethical restrictions that were designed in a different era to prevent lawyers from the unseemly competition for business now keep law firms practicing as a cottage industry providing handcrafted solutions at high hourly rates.

Adopt the D.C. model for partnering with non-lawyers - Lawyers work for corporations, accounting firms, management consultants, investment bankers, in fact practically every large organization, while law firms have very limited numbers of non-lawyers working with them. The best and brightest non-lawyer professionals will always be in an uncomfortable position in a law firm where they no chance to share in the increased value of the firm or manage attorneys. The D.C. model allowing non-lawyers to partner with lawyers should be considered in every jurisdiction, otherwise lawyers risk become a niche profession out-competed by organizations with greater financial resources, better technology, better cross profession teamwork leading to a total solution of the client's problem. At the end of the day, clients are not interested in legal services, they are interested in having their problems solved and they go to whichever profession or organization can most effectively solve their problems. The Internet means that all types of professions can deliver services around the world at low cost as Ernst & Young LLP has done with their on-line consulting service, ERNIE, targeted at non-Fortune 1000 firms.
Electronic Document Preparation - Inform the consumer and let them make the choice - Lawyers are only allowed to provide one type of represenation labor intensive, personal, individulized services that take into account every fact known or discoverable by by the lawyer. This idealized form of personal service is often not needed and given an option many clients would prefer a cheaper alternative, even one that has greater risks of overlooking or not addressing certain issues. On-line document preparation can be handled in such a manner that in many cases the final product is indistinguishable from a contract prepared by an experienced attorney. Often the cost for an attorney to prepare an individualized contract is greater than the individual wishes to pay for the size of the transaction. For many types of services the client will forego legal services of any type due to the cost. Clients should be given the choice in business dealing as to whether such document preparation should be done individually by hand or by various services, which may or may not be assisted by an attorney. Such services should be required to provide detailed information about the services so that the consumer can make an informed decision as how individualized the legal services should be.
Have a national license after 5-7 years - Can start by extending reciprocity - Restricting lawyers to practice in one state for what has become for most large firms a national and international practice is an idea whose time has passed. Lawyers who have shown themselves competent to practice law for a period of years, should not have to worry about whether their clients want them to visit them in their out-of-state offices or will have to make the clients travel to the lawyers office in the state where the attorney is licensed to practice law. An intermediate step to a national license would be to provide a reciprocity license among all the states that presently provide reciprocal admittance on motion.

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