Tuesday, March 25, 2014

An interview with Jordan Furlong, present day and futurist legal industry expert

Jordan Furlong blogs on the state of the legal market at Law21: Dispatches from a legal profession on the brink.

Give us a quick overview of your career path.

Like a lot of people, I came out of undergrad with an Arts degree (English major) and found myself wondering what, exactly, I was going to do with that. So eventually, again like a lot of people at the time, I wound up in law school, for a couple of reasons: one, I wanted a good career that would allow me to help people without having to deal with either calculus or blood; and two, it was an affordable risk. Granted, this was the early 1990s and it was Canada, but still: tuition in my third year of law was $2,300. (It’s $18,000 at the same school now.) There’s no way, as a slightly-upper-middle-class kid, that I could afford law school today, and that’s a bad state of affairs for the legal profession and for society generally.

Having finished law school, I completed my articling year (a one-year apprenticeship mandatory for Canadian bar admission) at a large corporate firm in Toronto. I like to call that a mutually unsatisfying experience. I wasn’t asked back as an associate, and I don’t blame the firm at all; eventually, I also came to recognize that I was a poor fit for the firm and vice versa (though it wasn’t a fun thing to absorb at the time). From there, I wandered around a bit (again, something you can do when you don’t have $200,000 in student debt) until I found myself in legal journalism.

Over the course of 13+ years in that field, I wound up working as an editor for three Canadian legal periodicals, including the Canadian Bar Association’s National magazine (the rough equivalent of the ABA Journal) for ten years. Near the end of that period, a little over six years ago, I began blogging at a site I called, very much on the spur of the moment, Law21 (21st-century law, basically). The blog attracted a fair bit of attention, and I started getting calls to give presentations on the legal market, which I was happy to do. And people began asking, “How much do you charge to speak?” And I thought, “Charge? Well, that’s interesting...”

So today, I bill myself as a lawyer (still), author (one short book, co-author of another), speaker, strategic consultant, and industry analyst. I study the global market for legal services and help lawyers and clients understand what’s happening in this market (short answer: everything) and what to do about it. I work with law firms, state bars, law societies, law schools, and professional legal  associations of various kinds. I frequently get introduced as a “futurist,” which I really don’t think I am: I’m talking about what’s happening right now and what’s going to happen a few years down the road. That’s not the future; that’s the present, with a trailer for the next episode.

I really have no idea how I ended up doing something as fascinating and fulfilling as this, especially since I sure never set out to do it. I often think of that great line by Douglas Adams: “I may not have gotten where I wanted to go, but I think I’ve wound up where I needed to be.“

What are some of the top trends you’re seeing?

So much has happened over the past few years that it’s hard to summarize, but in general, I think three remarkable and pretty much unprecedented things are happening at once.

Client behavior is changing. In the wake of the financial crisis and the recession that followed it, we’ve seen the start of a radical change in legal client behavior, prompted by real economic hardship for both individuals and many businesses. Consumers just can’t afford to go see a lawyer for even basic legal needs unless they absolutely have to -- because it’s not like most lawyers have frozen or reduced their fees over the past five years. (The massive growth of self-represented or DIY clients over these past few years is not a coincidence, to my mind.) And at the corporate or institutional client level, in-house counsel, who’ve been under pressure for ages to improve outside counsel spend and clarity, began to find that if they pushed lawyers, lawyers would give way and fall back. So they’ve been pushing -- not all of them, by any means, but still a remarkable number -- on discounted rates, fixed fees, RFP demands, and other unprecedented attempts to take control of, or at least gain greater influence over, the lawyer-client relationship. This has been a real shock to the system of big firms, which are staring at a major retool of their businesses models and a very limited capacity to make that happen.

New options for clients. And of course, it’s easier to push against your traditional supplier when new suppliers suddenly start entering the market. On the consumer law side, we saw the flourishing of LegalZoom, the launch of Rocket Lawyer, and over this past year or so, an explosion of app-based, crowdsourced, online, or low-cost ways to get what you need in family, estate, business, and other services traditionally lumped together as “general practice law.” These practitioners are now up against an army of offerings that, for the most part, aren’t as good as lawyers (yet), but that will cheerfully offer 80% of what lawyers do for about 20% of the price. (And again, remember all those pro se litigants and DIY clients: they’ve chosen the “no lawyer” option, which is also, strictly speaking, competition.) On the corporate side, we’ve seen the rise and evolution of legal process outsourcing (from India and the Philippines to stateside), document review companies, e-discovery vendors, automated contracts reviewers, and a host of really remarkable new technologies for getting legal work done. This is eliminating many lawyer jobs, especially at the BigLaw junior associate level, and those jobs, I have to tell you, aren’t coming back. They’re turning into project, contract, and temp lawyer positions, for better or for worse.

Change in legal regulation. My personal view is that someday, when they sit down to write the history of this period in the legal marketplace, they’ll lead off with the fact that in 2012, under the auspices of the Legal Services Board of England & Wales, regulators there began issuing licenses for Alternative Business Structures: law firms or legal enterprises owned partially or wholly by people who are not lawyers. There are nearly 300 of these businesses in Britain right now, and they’re helping to radically change the nature of what the legal market offers and what clients can expect and can afford. This is spreading to the US: Washington State has approved legal technicians, California is considering limited license legal professionals, and New York State is exploring legal advocates. These are the first tiny cracks in the wall of lawyers’ monopoly on legal services that will someday crumble. I’m on record as forecasting that the “Unauthorized Practice of Law” will be a dead letter inside ten years. Some US state, somewhere along the line, will choose to become the England & Wales, or the Delaware, or the Nevada (depending on your preferred jurisdictional metaphor) of the legal market and will allow non-lawyer ownership of law firms. It could be a year or so away in my own province of Ontario, Canada’s largest jurisdiction. It really is only a matter of when, not if, it comes to the US.

What’s a young lawyer to do?
It’s a hell of a time to be entering this profession, and I mean that in both the bad sense and the not-so-bad one: the challenges are immense, and the opportunities, which will someday rival the challenges, are still getting started. My general take on it is that new lawyers must develop a knack for entrepreneurialism. They need to enter this market ready to engage with it, wade in, both hands in up to the elbows, from day one. Decide what your desired customer base is, what your value offering to them will be, and why they should care: answer those three questions and you’re off to a strong start. The reflexive lawyer approach is to say, “I need a job,” but there will be fewer jobs out there for years to come. Instead, figure out what the market needs and how you can provide it -- affordably for clients, profitably for you.

If you’re looking for sources of business, remember that the latent legal market is massive. There’s an huge untapped market of people who need legal services and who would willingly hire a lawyer if they could afford one. I’ve seen an estimate that pegged that latent market at $90 billion every year in the US alone. One study in Britain suggests lawyers are missing out on nearly 85 billion pounds’ worth of work every year from small businesses that either take care of their legal needs themselves or ignore them. Studies from courts in different jurisdictions set the pro se litigant rate in family courts anywhere between 40% and 85%. If I were a young lawyer and saw all this, I’d be asking what these potential clients currently need and aren’t getting, and why they aren’t getting it. (Hint: start with price.)  Every law school and state bar should offer a course on how to run a law practice that everyday people can afford.

What do you think about:

Virtual law firms: I think they’re promising. Really, the virtual law firm is just an extension of a low-cost, affordable law practice. You could have a firm that’s nearly 100% virtual, I guess, though it’s more difficult to do that in actual practice. You still need, at the very least, a desk, a chair, a phone, a laptop, a printer, an internet connection, and a quiet, secure space somewhere. But if you can arrange your infrastructure such that you can make your practice less costly and more accessible, why wouldn’t you?

Law startups: The more, the better — the more people take a crack at building new and better enterprises for legal service, the faster we’ll find out what works. We need new tools and structures and approaches. To take one example, I find WeVorce really promising, not least because it takes a multi-disciplinary approach (recognizing that only part of the relationship breakdown process is legal), and that it’s online, understandable, accessible, and affordable: these are four adjectives you can’t apply to most law firms.

Flat fees: I don’t think the key concept here is fees or billing, but price. Most lawyers can’t properly answer a client’s question on pricing, but it’s the one thing clients most want to know. Good pricing gives your client certainty, reliability, or predictability in some combination, while also maximizing the probability that you’ll make a profit. If you know your own costs of doing business, what the market charges for what you do, and the exact, in-depth particulars of your client’s situation, then you can price successfully.

Legal education: Legal education needs to decide what it’s for, what purpose it serves. There are many law schools that apparently believe their mission is to develop graduates who could someday, by dint of hard work, great ambition and good luck, become law professors. If you don’t really take seriously the idea that your students will be practicing lawyers, that’s fine; just cut your tuition by 90% and admit that you’re a glorified M.A. program. But if you decide your purpose is to provide a thorough, professional grounding for lawyers to practice successfully and in a fulfilling manner, then you need to adjust your offerings accordingly. I’m not suggesting the other extreme of a trade school that doesn’t teach legal ethics or legal history but only basic information about how to be a lawyer and run a business. We do still need professors, policymakers, and researchers as well as practitioners. But either provide an integrated education for professional businesslike lawyers, or decide between M.A. and trade school.

Solo firms: I actually think the future lies with niched, networked, entrepreneurial solos: lawyers who may have their own clients, but who primarily are called in to work on several overlapping projects with an always-revolving set of colleagues, like skilled trades on a building project. We still tend to interpret “solo” as “general practitioner,” which is a problem, because what we think of as general law practice is on its way to extinction: much consumer law will eventually be conquered by non-lawyers and algorithms, with lawyers on the fringe. Future solos will be specialized and agile, online and accessible, using technology to dispense basic documents and transactions and adding value through skilled counsel and strategy.

BigLaw: More large law firms are going to collapse. I mean, law firms of all sizes collapse all the time, but they don’t all generate the headlines of a Dewey or what look to be a Patton. The fundamental law firm business model, which is shared by 5-lawyer and 500-lawyer firms alike, worked wonderfully in 1984 but is having a much harder time of it 30 years later, because the market environment has changed. The traditional leverage of highly profitable associates, the ability to shift all outcome risks to the client through hourly billing, the obsessive need for annual profit growth to keep partners from bolting -- these are hallmarks of BigLaw (and other-sized firms as well) and they’re not simply going to go away overnight. Client value, client service, systematization, technology, cash flow, collegiality, and professionalism: these will be the hallmarks of successful firms in future -- as they invariably were in the past, before we hooked ourselves on double-digit annual profit growth and began to think we should be as rich as investment bankers. Even the investment bankers, as it turned out, shouldn’t have been as rich as they were. We’ve spent 30 years in the wilderness, and we’ve probably got another 10 to go to complete the traditional wandering period. We need to find ourselves and find our right path again, and that process is now well underway. By the end of this decade, we’ll either be clearly on our way out of the wilderness and into the promised land, or we’ll be so deep in the desert that we won’t be coming out again. I obviously hope it’s the former.

What’s the most interesting thing you’ve learned along the way?

Lawyers are not that far from awesome. We are frequently given a hard time for our inaccessibility and emotional detachment and strategic cluelessness and time-wasting inefficiency and proud technophobia and ... well, for a lot of things. I’m often leading the hard-time brigade myself. But after more than 20 years in this profession, I’m more convinced than ever of the fundamental decency, intelligence, work ethic, moral concern, and professionalism of lawyers. In the vast majority of instances, lawyers want to help, and we can and do make a huge difference -- all the way from simple peace of mind over a family matter to keeping someone out of prison who doesn’t deserve to be there. We’re not a broken or an obsolete profession. We need repairs, reorientation, rejuvenation, and rededication, absolutely; but the core is still strong and is very much salvageable. If we can fix ourselves up, clean out our gears and reboot our systems for a new social and business environment, I think we’ll be unbeatable, and I think everyone will benefit as a result.

4 comments:

  1. That is a great article and very insightful. But I could not fully understand how consumer law will be conquered by algorithms. Could you give a more detailed explanation or an example? I am asking to check if this would be replicable to other parts of law (in my case, IP)...Thanks!

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  2. Hi Cristiano, are you referring to IP prosecution or litigation? There are definitely a lot of IP prosecution startups out there (LegalForce, for example) that help in the prosecution process. Lex Machina seems to use legal analytics to predict outcomes in IP litigation. -Amy

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  3. Applauding insight into the law and professional breakthrough available for young lawyers. It is futuristic approach as analytical approach of the present gives better insight into future horizons.

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  4. Hi fellas,
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    ReplyDelete