Richard Cohen is Legal Director of Epoch Software. He can becontacted on 0181 931 3030 or via e-mail at richard@epochsoftware.co.uk
There was a time when solicitors were held in high regard. Much like doctorsand bank managers their expertise was never questioned and their incomes wereassured. However, now that the year 2000 is almost upon us, the kudossurrounding the profession has disappeared, as has the opportunity for anassured income. The legal market, and indeed society itself, has changed to sucha degree over the last three decades that high street lawyers now face starkcommercial realities.
As the business world has evolved to become faster, leaner and fitter, aprocess of natural selection has taken place. The legal sector, never thefastest to adapt to change, has responded by becoming more corporate. However,at the smaller end of the market there exist numerous high street practices thatretain one foot in the past. Pressures have been building on a number of frontsfor some time and unless these smaller firms learn to adapt to new trends andtechnologies their position may soon become untenable.
In essence, high street practitioners are being squeezed at both ends.Overheads keep increasing, especially with the amount each practice now has topay to SIF just to stay in business, whilst at the same time competition in themarket-place is at unprecedented levels. One merely needs to look at the effectthat Hambros had on the conveyancing market to see how serious a threatnon-lawyers pose to high street practitioners. Also, the public’s perceptionof lawyers has changed dramatically and the personal service ethos that pervadesthe profession is fast disappearing. Instead, they expect a high degree ofservice, convenience and a price that that is easily predictable. This model ofservice provision has worked well within the banking and insurance sectors andconsumers expect the same in legal service provision.
Fighting Back in the E-Commerce Age
The best weapon that firms can adopt to fight back is technology – theInternet represents a real lifeline to high street firms because it levels outthe playing field for all businesses. In the past, Web sites have been likenedto shop windows because they allow companies to display their wares to aworldwide audience and a well-designed Web site can be every bit as impressiveas a smart office in a good location. However, this only represents part of thepicture because we now inhabit the ‘E-commerce Age’, which means that firmscan use the World Wide Web to generate fees directly.
Increased uptake of technology within the legal sector brings an added bonusand it is clear that improved ‘Access to Justice’, as envisaged by the Woolfreforms and the impending Community Legal Service and its proposed Web site, canonly be implemented through much greater usage of IT.
The idea of a ‘cyber-practice’ may seem as impractical as the‘paperless office’ but, before dismissing it entirely, remember that the twomost successful firms in the country each have their own online legal servicesthat they sell directly over the Internet. High-street practitioners may arguethat they do not have the resources of a Clifford Chance or a Linklaters but thereality is that technology has become supremely affordable to smalleroperations. One merely needs to look at how the price of PCs has fallen over thelast five years (to the extent where an Internet-ready machine now retails ataround œ500) to see how accessible technology has become.
In fact, embarking on a new technology strategy is a far less painfulundertaking for a smaller firm than at a firm that employs in excess of 2,000people worldwide – but only if a genuine will to change exists within thesmaller firm. The truth of the matter is that the only real sticking point isthe mindset of the lawyers, who may not be prepared to accept the culturalchange that commoditising parts of their practice entails.
Instinctively, most lawyers on the high street will feel protective abouttheir own role and the expertise that they possess. Unfortunately, it isprecisely this kind of protectiveness about their role that the vast majority ofthe public dislikes about lawyers. They do not want to employ ‘high priests’to perform mystical rituals – they want to see exactly what it is they arepaying for and, crucially, they are prepared to shop around.
Tapping into the New Market
Rapidocs and DirectLaw, from Epoch Software, allow lawyers to tap into a hugenew market-place, regardless of location in the country or position on the highstreet. It gives people a real reason to visit a law firm’s Web site becauseit allows a transaction to take place immediately. For instance, if an employerwants to draw up a contract of employment, he or she can download the relevant‘intelligent’ document from a law firm Web site at any point in the day andassemble it in their own time. The assembly software is free and has beendistributed to a wide enough audience to ensure its place as the establishedleader in the market-place before any others can follow its lead with‘copycat’ products. If there is anything the client feels uncomfortableabout drafting himself, he will seek further advice and the most likely firstport of call will be the law firm they bought the document from.
Giving clients an accessible, convenient and affordable legal product forsimple matters may actually be the only way to win back clients who prefer notto use lawyers for fear of what it may end up costing them. If we accept thefact that a latent market for legal services exists, we can sell these people‘shrink-wrapped’ legal services for common legal needs and get them used toutilising lawyers without fear. This means the next time they have a morecomplex problem they will, at the very least, be more amenable to the idea ofusing the same firm again.
Legal commentators are currently predicting a massive shake-out at the lowerend of the legal sector with blood on the high street. Our launch of an onlinedivorce service on 16 July produced over 1,000 online divorce downloads by thepublic in its first 30 days. This clearly demonstrates a willingness and adesire on the part of the public to purchase legal services in digital formatand lawyers are currently being slow on the uptake to provide them.
There are approximately 140,000 divorces per annum in the UK the largemajority of which are undefended. The average fee is approximately £500 and theestimated market value is £72m. If the price point is reduced to the £80 whichdigital delivery brings, the market size reduces to £11.5m. There must howeverbe significant numbers of potential clients who cannot obtain legal aid orafford conventional legal help but who can afford the digital price point, andwho can be targeted with such services. Desktop Lawyer has demonstrated that bytargeting a particular legal market sector in one month it took 8% of the marketsize by reducing the market value. Perhaps the digital price point in thefullness of time will substantially increase the size of the market so there isequilibrium between the size of the market value and an increase in the marketsize. Only time will tell.
However whether the market value increases or reduces, high street lawyersmust realise that others are ‘cannibalising’ their market and that they mustreact by cannibalising it themselves or find that non-lawyers will take theirshare of the market away very quickly. Unfortunately, casualties are probablyunavoidable because many high street lawyers will not change with the times, butfor those that can be forward-thinking and flexible, technology offers an escaperoute and, eventually, a way back to more prosperous times.
