Delivery models the key to a prosperous future Susskind

In the first of a series of reports on the recent World Masters conference in Sydney, ALMJ reports on the key messages for law firm leaders from keynote speaker Professor Richard Susskind.

Richard Susskind has a message for law firms that are fixated on new pricing models in a customer-driven legal services market – you have got it all wrong.

Speaking at the World Masters of Law Firm Management conference in Sydney in March, the British law firm management guru told attendees that many firms have misunderstood the needs of a new breed of cost-conscious clients. Firms, he says, think the solution is a different pricing model. “It really isn’t,” Susskind says. “The answer is new delivery models.”

A smart mix of technology solutions, collaboration with third-party suppliers and outstanding lawyer-client relationships represents the future of legal services, according to Susskind, the author of best-selling books such as The End of Lawyers? Rethinking the Nature of Legal Services and Tomorrow’s Lawyers. Not that costs and fees are an insignificant issue for clients. Susskind says general counsel and in-house lawyers are under “intolerable pressure” from senior management to reduce expenditure on legal services. However, the narrative for lawyers should not be ‘how do we price differently, but how do we work differently’. What will convince some grudging firms that they must alter the way they work? “With law, the fundamental change will come when, for example, simply getting a 10 per cent or 15 per cent cut on hourly rates is just not delivering the savings that clients want,” Susskind says.

Derided by some in the mid-2000s when he argued that the business model for law firms needed an overhaul, legal futurist Susskind says there is understandable anxiety within the sector about the need for change. Most appreciate, however, that the time has arrived.

Session snapshot
An independent advisor to major professional services firms and national governments, Susskind outlined a raft of takeaway messages for World Masters attendees, urging firms to:
• “head where the puck is going” when anticipating market changes, invoking the advice of ice hockey legend Wayne Gretzky, who argued that the key to success is targeting where the action will be, not where it once was;
• capture and share knowledge;
• consider a collaboration strategy whereby firms can share costs with other entities, especially for routine work;
• systemise, standardise and package service offerings while also gaining efficiencies
• “decompose”, or disaggregate, legal work into its constituent elements and then source each one as appropriate; and
• embrace technological innovation.

Perhaps more than anything, Susskind called on law firm leaders, as they come to grips with cost pressures and technology changes, to consider one key question: “What parts of your work could you undertake differently – and by that I mean more quickly, more cheaply, more efficiently and also of a higher quality using alternative methods of working?”

Three stages of evolution
The legal sector is set to evolve through three major stages, according to Susskind. Denial. Re-sourcing. Disruption. Since about 2006, many firms have been in denial about the changing legal services market and have been hoping that things will eventually return to ‘normal’: that is, they earn ever-higher profits year on year, with work walking through the door. This stage has about a year to 18 months to run, Susskind suggests, before all but the dinosaurs agree that the sector is facing fundamental, long-term change.

A stage of re-sourcing will then occur until about 2020, with firms looking constantly for smarter and more efficient ways of delivering their services through means such as offshoring, near-shoring, outsourcing and sub-contracting. One of the key considerations during this phase will be whether new service models mirror the work of fulltime lawyers or actually redefine the way the work is done. Disruption will then take hold in the 2020s as advanced technology systems outperform lawyers in areas such as the review of documents, intelligent discovery and automated document production. “They’ll start disrupting the market,” Susskind says. “And they’ll require law firms to rethink the way they work.” While some lawyers may secretly be hoping that they can retire before such trends occur, he says law firm leaders should be preparing for change to protect their firms – and their legacy.

New jobs: apply now
Susskind expects exciting technology options to reshape the job market in the legal sector, with the best application of legal knowledge likely to be in areas such as legal risk management and dispute prevention. He forecasts the rise of legal knowledge engineers, legal process analysts, legal project managers and online dispute resolution practitioners. Such positions may be available in businesses such as legal process outsourcers, online legal service providers and other types of new enterprises that prosper in an age of disruption.

“The legal knowledge engineer, for example, is the person who actually develops these online legal services, who takes law and essentially systemises it and reformulates it and makes it into a form that is accessible and palatable and usable by non-lawyers,” Susskind says. “That’s a job for the future.” Process analysts will examine any piece of legal work and identify how the work can be broken down into component parts and handled efficiently. And an online dispute resolution practitioner can offer new and feasible ways of resolving disputes.

As the job market evolves, Susskind hopes university law schools adapt with it, arguing that at present schools in the United Kingdom, North America and continental Europe – and perhaps Australia – are stuck in the past, drawing from visions of the profession that reflect Rumpole of the Bailey or a John Grisham novel rather than a modern law firm practice. “They’re pretty much the same as when I was there in the late ’70s and early ’80s,” he says, lamenting that the sorts of topics he discusses are not getting any attention in law schools. When he addresses aspiring, young lawyers and presents the truth as he knows it, they react with shock. “There’s a strong sense in the room of ‘why did no one tell us?’ They’re attracted to the law because of a kind of 20th-century conception of legal service.”

The magic formula – what clients want
Clients typically do not want bespoke work from lawyers, according to Susskind. Rather, they hope to benefit from legal experience that is packaged efficiently into a service. This can be done cost-effectively if legal work is broken down, or decomposed, into parts, with the more routine tasks such as document reviews and due diligence being allocated to providers such as outsourcing firms. This “managed decomposition” of legal service work requires collaboration with other professions, with Susskind suggesting lawyers should not be arrogant about their expertise. They must work with other disciplines and professions more willingly and respectfully. He envisages an industry in which two streams of legal work prevails. With lower-end repetitive work, firms will compete on price. However, for high-end work outstanding lawyer will be required who are “not competing on price at all – you’re competing on quality and experience and prior relationships”.

The magic formula, according to Susskind, is to clearly inform clients that legal work will be delivered in two parts. Firms should explain how they have invested in new systems and technology that allows routine work to be done cheaply and efficiently. At the same time, firms should let clients know that they have very experienced lawyers with deep expertise for complex work. The risk for firms only doing the routine work, Susskind warns, is that “you’ll always be in a price war”.

Fascinating future
Famous for questioning the future of the legal profession in his book The End of Lawyers?, Susskind’s latest book Tomorrow’s Lawyers suggests there is a future after all. The proviso is that lawyers must think differently about what work they do and how they do it.

“In the very long run we’ll see a fading of the craft of law as we saw a fading of a whole lot of other crafts,” Susskind says. “We don’t have tallow chandlers anymore and we don’t have mercers anymore. It’s not that candles or silk are needed any less, they are needed more, but the ways in which candles and silk are produced have fundamentally changed.”
Similarly, he believes the legal profession must change with the times. While he doubts that the work of humans will all be done by machines in 2020, he expects that by the late 2020s machines will have taken over much of that work. Although wary of predicting decades in advance, Susskind expects the practise of law in 35 years to bear little resemblance to that of today.
“So if you ask me about 2050, I really do think that much of what goes on right across the legal professions will almost be entirely eliminated.” That will lead to lawyers and other professionals rethinking what they do with their lives and perhaps embracing the Ancient Greek or Roman focus on passions such as the arts, music and other “non-fee generating activities”.

While the long-term outlook for the legal profession may be blurry, Susskind thinks the current state of flux in markets represents an enormous opportunity for smaller or second-tier firms to become market leaders. That “window of opportunity” is likely to exist from now until about 2025. “I don’t think that will ever happen again,” he says. Such an opportunity will not come from law firms that sit back and wait for things to happen. He cites the view of Silicon Valley technology guru Alan Kay, who believes the best way to predict the future is to invent it. Likewise, lawyers will have to respond to clients’ desire for different services which are delivered differently – while being of a higher quality than in the past. “Whether that is done by law firms is very much in your own hands.”

World Masters
The World Masters of Law Firm Management showcases the knowledge and expertise of world-acclaimed law firm management experts. Previous presenters have included David Maister, Thomas DeLong, Ron Baker, Ed Weissman, Stephen Mayson, Gerry Riskin and Ashish Nanda, all of whom are highly regarded international leaders in their fields.