Are law firms stuck in the ice age?

@LawAhead

With the legal industry facing a challenging and rapidly changing climate, it is hugely beneficial to look back at past events to learn how we can avoid the same mistakes and gain a deeper understanding of how the industry and firms should adapt.

Author: David Halliwell, Director of Knowledge and Innovation Delivery at Pinsent Masons

In 1903, Frederick Tudor was granted the first ever personalised car number plate in the United States, in Massachusetts. The number plate was literally “1”.  He was a wealthy man in turn-of-the-century Boston.

Tudor had earned his wealth by playing the leading role in the creation of one of the major US export markets – which at its peak, employed 90,000 people and had a capitalised value of $700m in today’s terms. But by the time of its peak – reached in 1886 – the seeds of the industry’s collapse had already been sown, and within the next 30 years, it had all but vanished.

The industry? Ice. Tudor made his fortune cutting, storing and exporting ice retrieved from the ponds of Massachusetts in winter and shipped around the globe.

He was an archetypal innovator; a driven risk-taker who saw a market opportunity and put everything he had into it. He capitalised on assets available in the area during winter: ice on the frozen lakes, labour standing idle during the logging off-season, sawdust from the industry which he used to store the ice to prevent it from melting, and ships arriving at the docks of the New World needing cargo for their return journeys to global trading partners.

However, most innovators need a practical, engineering-minded, pragmatist individual to work with. Tudor found his in Nathaniel Jarvis Wyeth, who came up with all kinds of ingenious ways and tools to cut and shape the ice.

Tudor’s ice became a fashionable accessory around the world, from Peru and Argentina, to Europe, the Persian Gulf, India, Hong Kong and Australia. Also, much of the US meat industry and its growth relied on his ice.

Now, we all know what led to the end of Tudor and his industry – mechanical ice production, which started out as a lab experiment in the mid-18th century, and which by 1850 was seen as having high commercial value. Tudor dismissed mechanical ice as inferior – cloudy, with a strong scent (and taste) of ammonia, and dangerous to produce. Despite this, as the technology developed, and as new sources of power became available, large-scale ice production became viable, and the ice was delivered daily to homes from local factories.

But of course, the story does not end here. Ice moved from being a service delivered to a person at home, to being a product accessible through self-service technology. In other terms, home refrigeration, powered by domestic electricity, meant that large-scale ice production for household consumption also came to an end.

It might not be obvious, but law firms today are facing precisely the same challenges that caused the end of Tudor’s industry.  Many are still engaged in artisanal activity, using manual tools to support clients, to prepare documents and to advise on a 1:1 bespoke basis.

Some law firms are now starting to move towards the industrial service age – the law industry’s equivalent of using large-scale refrigeration – to deliver a better legal advisory service but using the same basic model: legal advice, delivered by a lawyer. The technology means that the advice is delivered faster, and with more consistency, and may even be cheaper for the client.

However, a third level of innovation is also on its way: self-service of a product. Legal consumer products are growing to meet a market which has thus far been unsatisfied (and dissatisfied), and are granting access to legal remedies that had previously only been available on a 1:1 basis and only to those who could afford them.

The hallmark of disruptive innovation is a sneak attack from below; an initially inferior product that leverages new technologies to produce a “good enough” product that turns the market on its head

Now entrepreneurs such as Josh Browder (famously known as the “Robin Hood of the Internet” with his app that allowed people to challenge parking tickets) are launching apps that allow anyone to file a claim in the US for up to $25,000 from their phones. We can see how technology is allowing a service to evolve into a self-service product.

Commercial lawyers around the world will be looking at this, and saying to themselves, “But what I do is far more complex than that, you’d never be able to reproduce the quality of what I do with technology”.

This may be the case, but the hallmark of disruptive innovation is a sneak attack from below; an initially inferior product that leverages new technologies to produce a “good enough” product that turns the market on its head. Think about what digital cameras did to film, what streaming videos are doing to DVDs, what solid state drives and cloud are doing to disk drives. All were inferior products which became good enough – when powered by internet technologies – to satisfy the market need.

However, being aware of an upcoming disruption isn’t enough. Knowing how to respond is another thing entirely.  Every time I read about the global law firm market being bigger than ever before (which is happening every year at the moment), I wonder whether law firms are now at the same point Frederick Tudor was, just as his business reached its peak.

The personalised car number plate he owned is apparently still in his family and can be seen out and about in Boston. The industry he built, however, is no longer in existence.

David Halliwell is Director of Knowledge and Innovation Delivery at Pinsent Masons.  He helps the firm and its clients by promoting efficient and effective working practices and delivering legal services in innovative ways, leading the firmwide innovation hub and the firm’s Smart Delivery and wider innovation programmes.To see what the firm is doing differently, visit www.innovative.legal

Note: The views expressed by the author of this paper are completely personal and do not represent the position of any affiliated institution.