How Does One Measure Whether Or Not The Legal Market Is Innovative?

As you know, I was somewhat surprised to receive a series of comments from Moe Levine essentially taking issue with my attack on the hourly billing system and the lack of innovation in legal services. I am thankful that Moe weighed in on these issues because it really got me thinking. What are the hallmarks and signs of innovation within a niche market or profession? How will we as attorneys know that we are pushing on the edge of legal services to deliver more value for less money to our clients? What drives other markets towards aggressive innovation? I think that one of the real problems with the legal profession is that it is so incredibly insulated from the rest of the world. Yes, fortune 500 companies are sophisticated purchasers of legal services. But, we all know that America is driven by small and medium sized businesses as well as the workers at those businesses. Most Americans know little about the law and have relatively little involvement with lawyers. Those that do have experience with lawyers have the typical experience of entering a law office essentially being told what to do and thereafter receiving a mountain of transmittal letters which they neither understand nor comprehend. If you were to ask the average legal consumer what different billing options were available in the market, I am  convinced that the vast majority would not have a clue where to begin beyond the billable hour. As long as the legal profession remains an insulated and mysterious boys club protected by state bar associations, this pervasive lack of information about legal services will preclude a market driven push for change or innovation. When a client isn’t standing at your door demanding a particular service or a particular value proposition, that business is left to innovate on its own incentive. Many businesses do so in other markets. For some reason, key law firms do. The average ten person law firm is operating on exactly the same hourly billing principle that they were twenty years ago, except that they are finding more ways to capture billable minutes and push costs onto the clients. I would challenge anyone to provide any anecdotal evidence that law  firms actually have internal debates about how to deliver more to the client for less. I have sat at a lot of those tables and I have rarely heard the notion even considered, let alone seriously debated.

One key difference between the legal profession and so many other businesses is the almost complete lack of advertising that goes on outside of the personal injury field. I think that part of this may be because law firms in general have so little to say. Because there are so few options out there in terms of legal business models, you have to wonder how any firm would distinguish themselves from the firm next door. Law firms in the yellow pages advertisements follow a distinct pattern. But, the yellow pages is hardly the place to educate a consumer about differentiated products and services. While TV and print advertisements can raise awareness about issues such as alternative billing, the stone cold reality is that a real person has to enter the office of a real decision maker and make the case that they are able to provide better value (measuring quality and price) currently, the face to face interaction typically occurs between certain rainmaking partners and certain businesses on a somewhat limited basis. You might recall that I previously argued that law firms need to hire more traditional sales staff to take their case to the streets. These sales people can be non-practicing attorneys or simply sophisticated sales professionals. But, truly confident lawyers can not put in the time on the ground to sell their services an still do the work that is required of them within the practice. My clients are incredibly enthusiastic about my max fee and budgeted projects. They are out telling their friends to use my services. My firm is growing on this basis. However, if I really wanted to expand my business model and create true market demand for my particular brand of legal services, I have to have some way of educating the public so that they request my brand of legal services. I can’t think of any other way for that kind of market awareness to occur without mainstream advertising.

I also wanted to make some observations concerning the Internet in general and blogging a particular period. When I started the process of starting my own firm almost a year ago, I thought that I was the only one in the United States that saw the absurdity of the traditional hourly billing model implored by 90% or more of the law firms across the United States. As I started to poke around the Internet I realized that the ABA had actually studied the issue in the late 1990’s and came to many of the conclusions that I have come to today. Without their inspiration, I would not have picked up the torch and run as strongly and fearlessly as I have in the direction of innovation. Nor, would I have felt as comfortable as I do launching an all out attack on the evils of the hourly billing system. So, once again, I say, hooray for the Internet and kudos to the Blogesphere, both of which will be instrumental in effecting the change which I see coming for the betterment of our legal profession.