The Canadian legal market is worth roughly $12 billion a year. That is a very big number – one that will certainly catch the attention of aggressive multi-national companies. A good portion of that $12 billion market involves the careful application by sophisticated lawyers of high-end skills, knowledge and analysis. But an equally large portion, I can say with certainty, involves the application of simple, standard, repeatable processes. We in the legal profession need to understand just how vulnerable we are to losing our share of that market.
Clients are not prepared to pay our traditional high fees for what they correctly view as essentially process work: they’ll pay for legal advice, but not something a software program can do just as well as a lawyer. More to the point, clients now have a choice: an emerging fleet of providers, many from outside the legal profession, is perfecting offerings that deliver reliable solutions to commonplace legal needs at a fraction of our price.
This isn’t just my theory or a possible future outcome: it’s real, and it’s happening now. I can give you an example of how my own firm, Harrison Pensa, used systems and technology to re-engineer the area of debt collections.
Back in 2002, five representatives of one of our financial institution clients and five representatives of our firm gathered around a boardroom table to discuss the client’s collections issues. The client was frustrated with its recovery process: it had no knowledge of or control over the collections systems used by its cross-Canada branch network or the rates employed by the myriad law firms engaged to handle these matters.
Our in-house technology guru told our clients that in fact, we could create a computerized system that would automate the entire recovery process for them, bringing stability and predictability to both the template and the rates. It is a system that works for the law firm and our clients – a win/win. That marked the start of our Integrated Recovery Services Group, now in its 10th year and used by financial and insurance clients right across Canada.
The Integrated Recovery Services Group delivers a centralized, fixed-cost system for producing demand letters for Small Claims and Superior Court matters. The letters have markedly improved the success of our clients’ recovery efforts: we’ve even found that the mere presence of a law firm letterhead on the demand letter spurs the recipient into action.
You’ll have noticed that nowhere in that preceding description is there a mention of lawyers’ role in the process. That’s because there isn’t one. We created a streamlined, systematized, high-volume, low-cost process that solved an important client’s pressing problem at a cost of almost no lawyer hours. That’s what technology can do now. And if a law firm in London, Ontario, can do that, I can guarantee that huge multinational corporations can do it a whole lot better.
The legal profession can’t afford to ignore this anymore. We have to innovate and change our approach if we hope to keep billions of dollars in process-oriented legal work on our books. Innovation isn’t just necessary, but as we’ve demonstrated, it’s also possible. All we need to do is step outside our traditional “law firm” box, to think entrepreneurially and focus on solving our clients’ problems in the best way possible, not in the way most familiar and convenient to us.
Whether we like it or not, we have to price process work at a competitive rate, and that can only be accomplished through the use of systems and automation. We are trying to protect an area that is not going to be protectable for long. When you overprice a process-oriented product, as the legal profession has done, you open the door to competitors. Those competitors are at the threshold, and they don’t care about billable hour targets or average profit per partner. They care about solving clients’ problems. If we want to stay in this game, we need to do the same.