The legal services industry has been resting on the traditional billable hour service model since its popularization in the middle of the 20th century. Indeed, some firms are crossing over to alternative ways of producing and charging legal fees. Many, however, still run their service model the way they have always done. But contemporary problems require novel solutions.
The service model is not sustainable
Yes, many law firms are still making good bank with the billable hour. However, more and more pundits claim the existing model to be unsustainable. But what is the problem? Evidently, clients don’t mind paying for the billable hour if their issues are solved. The problem is, as it seems, many aren’t able to access legal services. The bar may be too high, even for some corporate clients. The (aptly named) problem of “access to justice” escalated far before the 2020 crisis. As Jim Sandman, the president of the Legal Services Corporation, put it recently – “The system is failing. Failing. We just need to acknowledge that.” Moreover, it is not only ordinary citizens that often find legal services inaccessible. In one of his webinars, Timothy Corcoran stated that “many law firms wouldn’t be able to afford their legal services.” One of the reasons, according to Tim, is the high cost of production. What could be a possible solution? The fact that you don’t need to produce all legal services from scratch all the time (much like software developers nowadays don’t rewrite lines of code for every individual user). “But legal services are different,” some would say, and they would be right – at least to an extent. Yes, there are some circumstances and cases that require the bespoke approach. However, the majority of the work is pretty formulaic. That implies that commodity-type legal services could be wrapped in a particular structure and technology, and delivered in an entirely different way. By way of example, in the Compliance-as-a-Service model, corporate clients would be using legal apps produced by their legal vendors of choice. Moreover, they would only pay a fraction of the cost of providing said services from zero.
Germany tries to scale access to justice
Legal institutions aren’t very susceptible to changes, partially since their role is to provide a stable framework in the first place. That may have made sense before, but nowadays everything seems to be scaling at a mind-boggling speed. Yet, we remain stuck with legal institutions straight out of the 19th century. German legislators do recognize the fact. The problem became even more prominent in the wake of the so-called “Diesel Scandal.” Many consumers in Germany and abroad felt they had been taken advantage of by car manufacturer VW. Yet it was still difficult for many to claim damages, often for reasons mentioned above. In an attempt to mitigate the issue, the German legislator introduced something that resembles (but is not quite the same as) the US class-action lawsuit institute. Traditionally, Germany (as well as most countries in Europe) belongs to the Continental legal system framework. The Continental system principally differs from the Common Law, and as such, lacks a class-action. For Germany, that gap was partially plugged on November 1st, 2018. The new law introduced Model Declaratory Proceedings, which somewhat resembles the Common Law class-action lawsuit. One notable difference is that, in Germany, only some qualified institutions are allowed to run such proceedings on behalf of plaintiffs (this is strictly regulated by the German Act on Injunctive Relief – UKlaG). Another difference is that these proceedings may end either with a settlement or a declaratory ruling. A declaratory ruling establishes the Court’s view on facts and interpretation of the case, but it doesn’t provide individual plaintiffs with a title to recover damages. Plaintiffs would need to continue claiming damages in a separate proceeding, and the declaratory ruling would be the grounds for their claim.
The technology yields opportunities
Technology (and legal tech, in particular) has always been there to support practices and models of legal service providers. However, like any other tool, technology is only as good as those that are putting it to use. And while legal tech itself may not always be an answer (there are many cases where it even raises the complexity level), there are some use-cases where it could help reduce request processing times dramatically (and frequently the A2J problem might be a problem of having too many requests at any given time – the bottleneck issue). So how could lawyers and law firms help alleviate the pressure on the system we have seen over the past decade?
Self-serving content to the rescue
Law firms and legal practitioners that have been practising for a while have vast know-how in their domain. For the sake of argument, let us consider that know-how as their “content.” Now, the only question is to what extent do they use that content. If law firms use their know-how to produce legal services from scratch upon each request, they might run into the bottleneck issue. Their costs of production are high. They become “exclusive” to those that are willing to foot the bills based on their considerable hourly rates. Alternatively, some law firms use their know-how to package the content and make it available to a virtually unlimited number of users. And here’s one example: In my recent interview with law firm CMS, I learned about their Dawn Raid Assistant mobile app. This app, for example, guides a very niche audience in certain situations. The app users have CMS’s know-how at their fingertips in times of need. Benefits of the above approach are manifold – let’s explore some:
- Lawyers/law firms reduce request volume and potentially reduce the pressure on that side of their business (improving, by extension, “access to justice”);
- Law firms can monetize their know-how packaged in apps (or other legal products) in a scalable way (much unlike the Billable Hour business model, which has a ceiling);
- Even if law firms opt to provide such content on a free basis (i.e. no monetization), such products could undoubtedly help them get their know-how across and boost their brand as a trusted adviser.
(The above mobile app example is geared towards corporate clients; however, nothing stops lawyers that deal in the B2C space from creating similar apps for mass consumers – if anything, there is potentially an even bigger market in that segment.)
No-code platforms and process automation
Even if law firms feel productizing legal services is not worth their time (debatable), they could still benefit from streamlining processes. Take the matter-intake process, for example. Technology gives law firms that work with bulks of similar cases a chance to onboard their clients seamlessly. Rather than taking all the records and facts of the case individually (whether online or in your office), you may set up a system that does it seamlessly for you. This example is precisely where no-code platforms could help. As I predicted earlier this year, such platforms are gaining in popularity already. The pandemic may have accelerated that. I also said that I believe no-code platforms are the future backbone of law firms’ business models. BigLaw does not have many other options. How would one such workflow look? For example, if you work with a bulk of standardized cases, you could use a platform to build out forms where clients could submit their data from the convenience of their home. Moreover, advances in digital signature tech and regulation (will) make it possible to execute engagement letters and PoAs remotely. In effect, clients no longer have to walk into a law firm office to retain a lawyer. Law firms could make the above data submission forms available via a link on their website, a social media campaign, or similar. It is incredible what can be done nowadays without writing a single line of code. This was still unlikely a year or two ago, but nowadays you can build out complex workflows that would otherwise require custom development. Not anymore if you rely on no-code platforms.
Do law firms use no-code platforms?
Yes, they very much do. The workflow I described above is just the first step in a process funnel in a law firm that provides services under the novel Model Declaratory Proceedings framework. For all intents and purposes, the goal of the firm is to reach as many potential claimants as possible. And in circumstances where you potentially have thousands of claimants, it is clear how onboarding them one by one (in-office, or otherwise) would be a problem. How does the funnel look from that point on? Well, after the initial onboarding, law firm staff check materials submitted online by people. The law firm then notifies the applicant if they meet the requirements to be a part of the class. If positive, the law firm proceeds with executing the PoA. Applicants get a draft online and revert with a signed version. The latter is checked once again by staff, countersigned, and sent back to the applicant. The whole communication iscarried out online, entirely through the platform mentioned above. Moreover, applicants receive status updates during the process and are kept tightly in the loop. And this is just one example. The beauty of no-code platforms is how they allow you to build out your workflows. With coding taken out of the equation, the only limit is your imagination.
Where does all this lead?
So what is next? As stated before, I firmly believe 2020 is the year where no-code apps gain their initial traction, with much more significant growth in 2021 and years that follow. The speed of adoption is debatable, but it is apparent that lawyers are starting to recognize all the benefits of such platforms. While, on the one hand, boosting processes is essential, I think the potential of scalable revenue will intrigue law firms. With know-how packaged into legal apps, they could sell their content under the subscription model (heavily popularized by SaaS). I firmly believe the legal industry will move from bespoke legal services into Compliance as a Service (or CaaS – still holding first dibs on the term). And – as always – the future is already here. We just have to wait a bit on the even distribution.