Commoditisation of legal services
“It is worthwhile to reflect on what is happening in other industry sectors, and to review opportunities in your own environment,” says management consultant Billy Linehan . “The legal profession in Ireland has been battered by the recession, even the best of firms have suffered declines in turnover and profits. Firms must plan for a changing world with new business models” advises Billy who is a management adviser to partners in several professional services practices.
A combination of technology and a change in the law are bringing a radical change to the legal sector in the UK where supermarkets are entering the market for legal services.
In an article today on the small business portal, www.bytestart.co.uk, UK based solicitor Giles Dixon describes the changes.
If you would like to buy some shares in one of the large City law firms or get a will written while you are in the local supermarket or WH Smith, this may soon be possible.
For a very long time the only people who can own law firms and offer legal services have been qualified lawyers, but this will be swept away by a new law that was passed in 2007 and comes into effect next year. Under the Legal Services Act, non-lawyers will be able to form ‘Alternative Business Structures’ with solicitors. This will mean that large companies such as banks or supermarkets will be free to offer legal services to their customers.
Some organisations are already reported to be getting ready for this brave new world – among them the Co-operative Group which has set up Co-operative Legal Services to support their members and offers will-writing and conveyancing services. Others, such as Tesco and the AA may follow. As the author of one recent report has said, “this is all about opening up the market by using the economies that come through scale and using marketing in a different kind of way”.
So instead of going to a high street solicitor in future, those wanting a legal service may go to a store which employs lawyers to provide services to its customers. And in time we may see new business models developing – for example a new nationwide “Easydeath Services” offering a menu including will writing and inheritance tax advice, funerals and probate services, all for pre-agreed fixed fees.
At the other end of the scale, some large city firms may decide to float on the stock market, releasing capital for the partners and opening up ownership to pension funds and other investors.
While the big bang day is not scheduled until 2011, another even more influential force – the internet – is already making legal services available in new ways – without even the need for the customers to leave their home or office. As well as low cost contract templates, wills and leases, there are services offering online divorce, online dispute resolution and mediation as well as debt collection. And by no means the most recent online service is that run by the Courts which have facilities for claims to be filed online.
The losers in this new legal world are going to include some smaller law firms, but there are opportunities for them as well. There is a limit to the number of legal services that can be commoditised – legal fees may be needed to tailor a contract template to the customer’s particular requirements, but a combination of a £40 template and some legal advice on that template is going to be a lot cheaper for the customer than going to a lawyer in the first place.
So we can envisage partnerships between solicitors and suppliers of templates developing. Indeed, some providers of templates, such as ContractStore.com, already offer customers a limited legal service, using the lawyers who write the templates sold from their website. Others are developing packages that involve a lawyer finalising a document that is initially generated online by the consumer sitting at home.
Commercial deals and complex disputes will always need support from qualified legal specialists who can advise on strategy and negotiate on their client’s behalf.
As for commoditised services, there is a limit to what they can do and they do not always come with a human face. So, just as those wanting quality food will go to a farmers’ market or organic butcher rather than Tesco, so many people will still prefer to go to a solicitor rather than Tesco Law Ltd.
About the Author
Giles Dixon is a solicitor, managing director of ContractStore.com
www.bytestart.co.uk Posted May 5, 2010