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Guest article: Using technology to compete with new entrants

by Arlene Adams, managing director & co-founder of Peppermint Technology

Some of the largest companies on the planet didn’t exist 10 years ago. Facebook, Twitter, Google, Skype, eBay, Trip Advisor, Expedia and Amazon are all new entrants growing rapidly to displace traditional businesses. Despite the economic turmoil there is a rise in prominent new internet companies building real, high-growth, high-margin, highly defensible businesses.

They all have one thing in common. They focus on transforming the customer experience and they use technology to make it happen. Increasingly we are seeing a trend emerge where the core IP of a successful business is their software Platform. The legal market is not immune to this trend. Only last week Rocket Lawyer, the new online legal services company backed by the software giant Google, announced a plan to enter the UK market next year.

The advent of the Legal Services Act is one driver encouraging this trend in the legal services market. Even if ABS’s don’t change the market the fear they might will. I already see a divide emerging amongst firms. There are firms who believe the Legal Services Act will make no difference because you can’t commoditise a highly personal service. That’s what the board of many companies said in the 90’s and many no longer exist. For the losers it wasn’t death by a big bang but a slow painful death by a thousand cuts.

On the other side there are firms who are grasping the change in the market as an opportunity to get their business in shape. Smart firms recognise it makes good business to respond to the threat of ABS’s even if it doesn’t have the “tsunami impact” some predict. By planning for the worst case firms will only be stronger and more competitive.

Technology will play a massive role in the determining winners and losers. While the technology is not the answer itself, it is the enabler to make it possible. If you cut through the hype of technology suppliers there are only two things that really matter. The first is the use of technology to transform your customer experience and the second is the use of technology to streamline your business and cut cost. Everything else is noise or detail.

Many firms mistake technology with “commoditisation”.  I often hear firms state that technology will eradicate the “personal experience” upon which they differentiate their service. The reality is very different. High value service industries, of which legal is one, have combined technology and human services to deliver a far greater personalised service. The idea that technology will de-personalise the service is at best a myth and in many instances just an excuse to do nothing. Take the finance industry for example. The use of technology enabled a highly personalised service 24/7. Finance customers have much more control of their finance decisions because they have the technology, collaboration tools and content to make more informed decisions. As a result customers are more satisfied with the service and banks have reduced costs significantly on the back of a self service model.  Law firms should be asking the question “why do customers need to visit an office?” The office will always have a place, especially in some areas of law, but it won’t be the norm.

Law firms, by the nature of their business, are process heavy. Where there is process there is always an opportunity for technology to automate tasks. Often firms do things a certain way because they always have. This makes it difficult to implement the automation of tasks because it involves taking people out of their comfort zone and handing over control to the technology. By contrast many new entrants are in their comfort zone when it comes to the automation of tasks through technology. They are experts in doing things without human intervention. Even if the concept of automation is uncomfortable firms need to be conscious of it because automation is synonymous with the brave new world. If a new entrant can automate a process, and deliver certain tasks with 50% less people, then this will impact the cost of delivery. Price is a proven major influence on a client’s choice of firm, so automation matters.

Successful new entrants don’t enter a market by re-creating what exists. They start by asking “what does the customer want and how can I best deliver this?” Some firms also ask this question but the difference is new entrants have no legacy. The constraints and culture of an existing business is the biggest limitation to thinking radically about future service delivery. In the legal world the partner structure makes it even more difficult to get consensus for change. I would suggest existing firms should not start the journey by asking “how do we move our firm forward or compete with new entrants?” Instead they should ask “if I were setting the business up today, without any legacy, what would I do to deliver what customers want in three years time?” The firm that can answer this question, and build a plan towards it, will survive and thrive. The difference in question may seem subtle but the answer and strategy will be very different. 

I believe the UK legal market will change significantly over the next three years. I expect some big brands, that don’t exist now, to be major players of the future. I also believe existing firms, who really focus on the customer experience and new ways of delivering a streamlined legal process, stand to be the biggest winners. The question is how many existing firms will think and act differently and be prepared to build their business on a software platform?

9 replies on “Guest article: Using technology to compete with new entrants”

Arlene – whilst it pains me to admit it, I find myself agreeing with much that you say. However there are some key factors that will hold existing law firms back leaving the way for new kids on the block. Firstly there are very few high quality IT Directors, secondly the existing 'legal specific' software available is with a few exceptions average at best and thirdly, and most importantly, the (equity) Partnership model is the biggest barrier to innovation, flexibility and rapid change.
The triple whammy of Partners perceiving IT as a cost centre that directly impacts their deep pockets, the industry using useless and misleading metrics such as PEP to measure itself and budget spend by committee, result in little chance of the significant (and needed) investment in innovation.
I have said for some time now, the next big players in this space will be technology firms who hire the top legal minds and mitigate any risk/shortfall with insurance. Will the customer get a more personal service? No. Will the customer get a cheaper service? Yes. Will the customer get a better service? Let's see…….

Only Facebook, Twitter and Skype didn't exist 10 years ago.

An interesting read, thanks for contributing the piece.
In addition to the changes being faced by law firms, be they tsunami-like or slow burning, there will inevitably be a parallel faced by legal IT vendors.
For years (decades?) the air of mystery and specialism around legal software has prevailed. The likes of TikitTFB, Eclipse and Pilgrim et al, who predominantly target the mid-to-low-tier firms, have always been able to charge a premium for their offerings.
As firms, for lack of a better phrase, “man-up”, in the face of the Legal Service Act and as some of the big brand players (Co-Op etc) move in to the market I can't see them paying high prices and maintenance renewals for what is essentially legacy (in terms of both platforms and UX) software.
It is the perfect opportunity for software companies (established or new start-ups) to shake things up by “pulling an Apple”. i.e. Doing away with legacy platforms and UX and designing an entirely new experience on a new platform (such as MS Dynamics or A.N.Other)
If my understanding is correct, this is the approach Peppermint is hoping to take.
Hopefully they will pull it of. If they don't I'm almost certain someone else will.

It's a cheap shot to say that the existing 'legal specific' software is 'average at best'. In the main such software is specifically designed for this market and one must never underestimate the effectiveness or the economics of that in a small-ish, finite market in its ability to deliver strong ROI. Witness SAP, for many years an extremely mediocre (but well engineered) generic ERP application originally built for MRP. It never has and never will gain mass acceptance in the Legal Market because it's R&D is driven by the world's large commercial organisations and so is massively over-engineered and under-featured for legal (granted the accounting does provide good international capability). Let's recognise that software innovation in Legal IT has always and will always be driven by small niche vendors who can afford to focus all their R&D effort on the sector. I don't see any big players innovating like that – all they do is acquire and 'roll up' as we are seeing with the current buzz of M&A activity. Power to the niche vendors!

Legal specific software is average at best – from both a platform perspective and a user interface perspective.
Current versions of legal IT applications might have more and more .Net code or whatever other language is currently en vogue but the fact remains that these applications contain layer upon layer of cruff that has built up over years of development and fixes to satisfy “small” clients that are paying a small fortune.
Big players are not going to be happy with that.
One very well known legal IT vendor cannot release a new version of its software without at least one subsequent re-release due to new bugs that have been introduced or old bugs that re-emerge. The most recent version of their software was re-released 4 times! Can you see the likes of The Co-Op being happy with that?
The legal IT market needs its own Legal Services Act-type shake-up in order to improve – increased competition leads to increased innovation.

What a refreshing article – I think too many law firms are burying their heads in the sand and are in danger of losing the focus on client experience and service.
As Head of IT for a relatively small law firm, my focus (and the Managing Director's) is to use technology to improve and provide new and better ways of working, to simplify tasks which will help to provide the ultimate client service experience.
Together with Legal processes outsourcing and asking the client “what they want”, we see this as a way of putting all our energy in the client experience which we hope will help us to grow significantly. Hopefully other law firms continue to bury their heads !

It is a regrettable fact that the monopoly for the provision of legal services has gone. The changes are putting neatly the final nails in the coffin for a profession that has traditionally focused on the work, rather than the business of the work. That is not to say that the traditional practices have to lose out, after all they have the immediate and resident expertise to prevail. So many elements of this article resonate with the business imperatives of a legal practice over the coming 24 months and I also believe that it is via a radical approach to technology that the legal practices of today can ensure they are here in month 25..

The Co-op seem very happy with Eclipse and their Proclaim (Progress) system which I understand they have been using for a few years.

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