ABA Legal Tech Conference – Chicago – April 2013

Introduction

Two themes dominated this year’s conference: cloud computing and disruption of the legal profession.

Cloud computing

There were about 111 exhibitors at the conference, of which at least 61 overtly represented themselves as having a cloud-based or Internet component. Cloud was central to the differentiation message of most legal IT businesses, indicating that it is now mainstream.

Most of the interest seemed to centre on the smaller and more innovative IT product and service providers, especially those focussed on Workflow, Document Automation and Document Management.  The major sponsors of the show, Lexis Nexis and Thomson Reuters received much less interest despite the size and central location of their stands.

Interestingly, one area we expected would be popular, on-line marketing, did not garner much attention either. Our business, BHL Software, has been experimenting with on-line legal marketing via the GoodLawyers initiative, but the large US businesses in this area, Avvo and Lawyer.com, did not appear to be very popular. This echoes our experience with GoodLawyers: while we put a lot of time into it and generated interest and referrals, we could not find a business model that paid.

The on-line practice management systems, Amicus, Action Step, Clio, My Case, Rocket Matter (not to be confused with Rocket Lawyer) and Tabs3 were interesting because they generally offered simpler interfaces and less functionality than their “land based” counterparts. This simplicity is an appealing advantage compared to current systems, although the weakness of pure cloud-based systems seems to be a lack of consulting and integration services, as seen in the Salesforce.com experience.

For new firms, it makes sense to begin with an on-line PMS, noting that the low cost of about $40 per user per month will multiply as the firm grows, and that in the US, “practice management system” often means just time and billing or just matter management, with accounting software being a separate purchase. In Australia we tend to provide a complete system, in our opinion a better solution, although Leap has done well in smaller firms with its combination of matter management and MYOB accounting.

In our view, a hybrid system is the ideal solution as it permits simplicity in on-line components, including smartphone and tablet access, combined with required complexity in Windows-based components. In this model, data can be stored in a private cloud or on local servers, controlled by a firm’s contract or in-house IT staff. This is the BHL offering and some other land-based vendors are taking the same approach.

Disruption

Technology appears to be a driver of change in the legal profession. A technology conference naturally attributes changes in the profession to the development of new technologies and the refinement of established systems, but as lawyers we should understand the distinction between correlation and causation.  In our view, the reasons for the apparent changes to the profession are deeper than the automation of tasks, they reach into the significant social changes technology (including the Internet, social media and smartphones) and the deregulation of tertiary education are bringing about.

Since about 2008 there has been a lot of fear entering the legal profession, echoing some of the attitudes of the recession of 1992, when conveyancing was first deregulated.  That fear naturally centres on several pivots:

• the preference most firms have for lawyers in their thirties and forties, and the difficulties lawyers younger or older than that have in finding good jobs
• the difficulties many larger firms have in maintaining growth in fee rates and indeed in fees
• the difficulties many smaller firms face in finding sufficient work and in getting paid
• the alleged oversupply of lawyers
• the concern that on-line, do-it-yourself lawyering will take away bread and butter work
• the reduction of personal injury work because of regulatory changes and the concentration of work in specialist firms, for example Slater & Gordon and Maurice Blackburn
• the rise of other well-funded specialist firms offering fixed fee or specialist services

All of this feeds the sense that law is ceasing to be the preserve of an educated, ethical elite and is instead becoming an industrialised business like any other, in which service providers are the employees of professionally run and externally funded corporations.

Conclusion

In the past, law has attracted conservatives, people who prefer the status quo and who want to be pillars of their communities. And that has been a good thing.

Increasingly law is attracting and rewarding entrepreneurs, depriving conservatives of control and pushing them into jobs.

Those now in their forties may be the last generation of lawyers who will inherit rather than buy the dominant brands, although the large pool of young talent may enable the largest firms (in American parlance “Big Law”), to continue to recruit the most privileged and the most connected, if not the best and the brightest.

The problem for smaller firms is that the large remaining pool of talent is their competition, not their source of potential recruits. Large corporates will continue to use Big Law, but small firms must usually service small businesses and individuals, facing competition from DIY websites, “Tesco-law” (in fact Co-op law), and a very large number of other small law firms.

The good news is that both small businesses and individuals will continue to require Trusted Advisors. Once you have acquired a law degree and a practising certificate, there are an increasing number of services available to reduce the barriers to private practice. Web-based marketing is increasingly difficult to game, and transparent social marketing will make it easier for clients to find the best lawyer for their budget and needs. If you are that lawyer, if you are a valued advisor, then it is likely you will do well; the cream usually rises to the top. And there are still opportunities for entrepreneurial lawyers who want to use innovation to create the new future.

Christopher Eddison-Cogan is a partner of Barringer Leather Lawyers, a director of BHL Software Pty Ltd and a member of the IT Committee of the Law Society of NSW.