Lawyers have to face a reality that clients these days don’t just hand over a case and expect the lawyer to do the job, get the fee and move on.
Clients changed. Their demand for legal services is now undergoing important transformation, reshaping the fundamentals of a profession traditionally adverse to changes. This puts pressure on managers, whose main objective is to point the sail in the right direction, identifying trends early and often, foreseeing the evolution for years ahead. Unless they find the right answer, the harsh reality will mean that some firms will go bust.
The need to change does not only come from the aftermath of the economic downturn with the associated price pressure and increased demand from clients, but also from radical globalization of the economy, a fast pace of technological innovation and regulatory changes that provide breeding ground for new kinds of competition never encountered before.
One such threat to traditional lawyering is allowing different types of non-lawyer service providers to offer legal services. This opens up the legal market for a new kind of competition with a disruptive business model, without hourly fees and the associated shocking bills. These new “consultants” have developed new ways to communicate with clients, using the internet and cloud services, offering around the clock availability, a worldwide network of outsourced talents, packed in an easier and cheaper way to work and interact with the client.
In Romania there are roughly 28,000 lawyers and new business is not coming to the country in a volume large enough to feed all. Also, due to budget restraints, companies have less money to spend on external advisers. The shrinking demand and increasing supply, means only one thing - pressure on fees and dumping price competition. As some of the interviewed lawyers pointed out the challenge of matching a price offer makes even some large projects unattractive. This challenge of matching higher discounts and predictability with cap fees, demands for added efficiency. Lawyers also pointed out that the happy days of hourly fees are slowly disappearing, seemingly for good.
What does this mean for lawyers and how can one be successful in an already crowded market?
The simple answer is – by innovation. To compete in such an unpredictable and fast changing economic climate, law firms will have to use creative thinking and may want to explore new ways of working and collaborating with other firms to streamline resources. Preparing a new generation of junior lawyers in new fields of expertise, capable of understanding the needs of different clients and taking up the challenge of newly arising stars of the economy is also mandatory.
In a rather small pond like Romania, where law firms compete for limited resources, new business is gained through referrals, therefore creating relationships is vital. The use of new communication channels and technologies, such as social media and offering information for “free” may pay dividends in the eyes of the “millenials” who might become the clients of tomorrow. Free access to legal advice can be a threat but also might turn into opportunity. Some standardized legal documents that lawyers were charging for are now available online, often for free, on individual websites as well as from collaboration portals in Romania.
Observing what is happening on the Romanian legal market with the newly established firms, the wide base of legal service providers, the free information available on legal portal networks and social media, it becomes obvious that clients have a lot of options to choose from, becoming more and more aware of new channels of information and will eventually start demanding their lawyers to become more efficient and provide added value services.
The lawyering scenario of the future will still have to cover all the basic stuff of a lawyer’s work but will also encourage firms to rethink their approach and use their integrated knowledge base and practical experience in order to professionally service their clients.
by Adrian Ion
Publisher, Which Lawyer in Romania