Adventure of Strategy

Richard Susskind is definitely a man worth listening to. He has been a thoughtful observer of the impact of technology (in particular) on the legal profession for a quarter of a century. I blogged about him more than 18 months ago, in a post titled IT - The Next Ten Years. Author of a landmark 1996 book on law firm management, The Future of Law: Facing the Challenges of Information Technology, he has now taken the debate to a new level with a book to be published by the Oxford University Press next year, titled The End of Lawyers.

I've been deep in the Appalachian Mountains with my family this past week, so just got his email announcing the book and an online discussion being hosted by  The Times (of London) this morning. This is an extremely important discussion. It goes right to the hub of how firms should be thinking about their medium to long term strategy.

Distilling all down to the most basic fundamentals, I'd make the following three observations:
1.   Which legal profession?

In the US and the UK legal markets (and many other "western" legal markets too, I'd warrant,) a gap has already opened between the high end commercial law firms, that may be characterized as extremely sophisticated business advisors, and "the rest." The former are increasingly profitable, successful at attracting the top talent and challenging and satisfying places for premier professionals to craft a career. The latter are barely keeping up with inflation and that in the face of increasing cost sensitivity by clients in the core service areas. (See slides no's 69 and 70 [no's 19 and 20 in the second download] in my presentation to the Association of Legal Administrators Conference in Nashville last month, downloadable here and also my previous post America's Two Legal Professions.)

It is not in the least inconceivable that prices that the market is prepared to offer for less sophisticated legal services may deteriorate to the point where it is simply not economic for law firms to continue to provide services that they currently regard as fundamentally core, at least not in anything like the way that they are being delivered today. Even at all. Unconvinced? Then read the March 2007 column in The Lawyer.com titled Firms to Go Bust May Top 3000, says Mayson.

While we're talking about "both" legal professions in terms of an evolving industry, therefore, many of the high end firms are already well on their way to getting to grips with this, and seizing opportunities. "The rest," which would include many firms in the 10 - 100 lawyer range, are in quite dire danger of becoming irrelevant. This process will be painful, both financially and emotionally. Like the character in Ernest Hemingway's The Sun Also Rises, who when asked how he went bankrupt responded: "Slowly, then all of a sudden...." it will likely be most painful for those firms that ignore the strategic indicators and try to get out of the morass by simply working harder and cutting prices further.

2.   Complex Adaptive Systems = Unanticipated Consequences

In complex systems such as economic markets (which the market for legal services undoubtedly is,) actions always have unanticipated reactions. Alan Greenspan writes of this on page 338 of his biography, The Age of Turbulence: Adventures in a New World, in a section on economic popularism:

" .... in economies where millions of people work and trade every day, individual markets are so intertwined that if you cap an imbalance, you inadvertently trigger a series of other imbalances. If you put a price ceiling on gasoline, shortages emerge and long lines at filling stations develop, as became all too apparent to Americans in 1974. The beauty of a market system is that when it is functioning well, as it does almost all the time, it tends to create its own balance. The populist view is equivalent to single entry bookkeeping. It scores only credits, such as the immediate benefits of lower price gasoline."

What we are observing, in the United Kingdom and Australia so far, with the deregulation and economic liberalization of the legal profession, is nothing less than the deliberate introduction of a massive imbalance of fundamental proportions into the existing legal services market. By definition: the market will morph fundamentally as a result. By definition: some of the consequences, almost certainly transformational, will be unanticipated. By definition: the new system that emerges will evolve to defuse instabilities caused by these consequences, until a new state of dynamic equilibrium is reached. This new state is most unlikely to be similar to what currently exists and is even less likely to remain limited to those two countries unless the experiment proves to be a failure than can be reversed. (Less likely still, especially the "can be reversed" bit.)

3.   Globalization, Demographics and Technology remain the primary vectors

In my humble opinion, Thomas Friedman's book The World Is Flat : A Brief History of the Twenty-first Century remains the best generally definitive work about what is really going on the world in the 21st Century. Technology is allowing countries that previously were effectively excluded from the global markets both to offer and to purchase goods and services themselves from across the world. The global socio-political barriers that existed during the Cold War have all but disappeared. Technology (especially communication technology) is now at the point where the impact on how we can live and work is radically different to even ten years ago, and the exponential rate of IT development seems, if anything, to be accelerating yet faster. We are barely scratching the surface of the potential, but this is largely because of (by comparison) technologically illiterate leaders. The new generation of professionals entering the work place have grown up with this advanced technology, and are completely comfortable with it. As they become decision makers, so change will accelerate further.

This is as true in the legal profession as anywhere else. Some law firm leaders "get" this; some don't. Law firms are generally not good at strategy. See my friend Bruce MacEwen's post Four Leaders on the State of the Profession and the results of the Managing Partners' Forum strategy survey that he, I and Andrew Hendley conducted in August this year, if you doubt this. (Download the slides outlining the survey results here. Given that about 400 people have downloaded these slides so far, they have obviously struck a chord!)

So:  Personally, I have no doubt that Richard Susskind is right when he says that the legal profession is going to evolve fundamentally over the next decade or two, in ways that cannot even be anticipated today. He is not predicting the end of the legal profession, but he is predicting the end of the concept of a "lawyer" as we currently understand it. The implications, obviously, are far reaching for law firms.

Luckily, the key to strategy is not to be able to anticipate the future accurately. It is not even to know, comprehensively, what the firm's overall "action plan" needs to be. Rather, it is to know what to do next. After that, it is to have the systems in place to determine the best next step thereafter. And thereafter, and so on. It is also important to remember that change presents both opportunities and threats. The greatest danger lies in ignoring it, or pretending naively that it won't really have any significant impact, or seeking solace in a 'strategic plan' that (once again: by definition) is out of date before the ink dries. This requires a rethink of the concept of strategy, which is one of the basic foundations underpinning this blog.

Here are links to a selection of other comment in the blogosphere, on Richard Susskind's new book and the ideas that it presents:

practice management blog - Prof. Richard Susskind

INHOUSEBLOG - The End of Lawyers?

Booksellers Association - We are not alone

ADAMSDrafting - Susskind on "The End of Lawyers."

Legal Blog Watch - Are Lawyers Going to Become Obsolete?

idealawg - "Will lawyers exist in 100 years? Join the debate"