Commoditisation is viewed by some in the legal profession as a threat but it should be seen as an opportunity, particularly with the growth of the internet. Stephen Lucas of Barnetts Solicitors reports
There is much talk about the growing issue, or problem, of commoditisation of legal services amongst academics and lawyers alike. But does it represent the future for legal services and how can technology best be exploited to take advance of the opportunities it presents?
With an estimated 38 million people now online in the
The increased competition this generates in the online marketplace means there is less differentiation between the available services, and as one legal service becomes indistinguishable from another the client has easy access to, commoditisation will inevitably occur.
In recent years, online legal services have moved ever closer towards commoditisation by presenting a fixed fee for services instead of relying on the traditional method of billing time back to the client.
With the internet’s growing raft of blogs and websites specialising in reviews and service comparisons, the consumer has much more scope to select a legal provider on the basis of costs and online reputation. This is good news for the client, but what about the solicitor?
The devaluation of legal practice?
Commoditisation is viewed alternatively as either a threat or an opportunity by those within the legal profession.
As online competition increases, prices of legal services are continually driven down and this can reduce profit margins and trigger concerns about the gradual devaluing of the practice of law.
From a business perspective it makes a great deal of sense to systemise and standardise the more routine and repetitive tasks that involve less skilled legal input because there are obvious cost-saving benefits associated with it.
But will lawyers resist commoditisation to protect their traditional work patterns? There is always the risk that it could, in time, render the high street lawyer an endangered species, superceded by highly efficient ‘super-firms’, and that potential students might be discouraged from training to become a solicitor in a commoditised marketplace.
These concerns are certainly valid, as is the fact that the growing availability of legal forms, deeds and automatically generated wills online is generating a dangerous culture of ‘DIY law’.
Most of the web-generated legal agreements available do not take into account specific items of law and they often provide flawed, generic clauses which are simply not fit for purpose.
Online wills, for example, may look like a great bargain at first glance when a web company is offering one for less than £50 - a fraction of the cost of a good lawyer.
But without seeking expert legal and tax advice, the inadequacies of these online services often don’t surface until the time of death, when remaining heirs are forced to pick up the pieces. In the long-run, far more time and money will be expelled than would have been the case if a qualified lawyer had been consulted.
Law firms offering a ‘value’ commoditised service also run the risk of alienating potential clients who are prepared to pay higher fees for a bespoke service, because the client will assume the staff are less experienced in specialist areas of law if ‘the computer’ does most of the work.
The opportunities for commoditised services
Commoditisation has its detractors, particularly in more traditional law firms but, managed wisely, it also represents big opportunities for innovative legal service providers.
It gives us an incentive to embrace technology and seek out new ways to deliver services more efficiently, whilst adding value and differentiating our services for clients in new ways.
All legal processes, however specialist, include elements of repetition and administrative routine, and this is where many of the opportunities lie.
Lawyers are, more than ever, under pressure to find new ways of automating or outsourcing these elements, in order to continue providing cost-effective legal services in an increasingly commoditised environment.
Technology and software development is now relatively inexpensive and easily accessible and this is where the key lies for commoditising future legal services.
Standardisation and automation
The first steps towards achieving this are standardisation and automation. All legal processes can be streamlined and broken down into their core components, and then mapped out for any eventuality.
With XML and web services fast becoming the standard means of transmitting data between different IT systems, automation and systems integration are more achievable than ever before. This creates new prospects for transforming the way many legal services are provided.
When seeking to standardise systems, all documentation and precedents need to be created in template format in the first instance. The systems must then be put in place to automatically merge those templates with data from the client’s case management system.
The use of efficient workflow procedures goes hand in hand with providing a commoditised service. This is because most legal processes are essentially a sequence of distinct operations, in much the same way that specialist machines and operations form part of a co-ordinated mass production line in a manufacturing plant.
Workflows can also be established in ways which trigger key events - for example, the logging of a mortgage offer sent by post might trigger a standard email, SMS or letter to be sent to the client, informing them that the offer has been received.
The example of Home Information Packs
The creation of Home Information Packs is a good example of how automated workflows and web services can be used in practice to enhance service.
It is now perfectly possible for HIP clients to access an ordering site, complete a web application online and pay online using a debit or credit card. Search and energy performance certificate requests can then be sent electronically to the relevant providers and the results returned to the case management system, all through XML web services.
Once the necessary documents have been completed and returned in this way, the workflow process can be configured to bundle the HIP automatically and inform the client that it is ready to be downloaded.
The benefits of such a system are clear. The finished product is completed more quickly than traditional paper-based transactions would allow, and there is virtually no manual input involved, which vastly reduces labour costs.
Sub-contracting out
Traditional law firms are increasingly taking advantage of the commoditised legal market themselves, by sub-contracting legal services to specialist, commoditised providers.
This trend is growing in popularity because it both reduces a firm’s overheads and can allow them to take on work that would not otherwise have been their speciality.
Commoditisation can also be used as a means to help control risk. Standardised forms can be more easily controlled and systems put in place to review and update them at regular, planned intervals.
Conclusion
As competition increases, budgets are squeezed and cutting-edge technology becomes ever more accessible, there is less and less justification for ignoring the many opportunities presented by the efficient commoditisation of our more routine legal services.
There will always be a place in the legal services world for the high-end bespoke solicitor but for the typical off-the-street and bulk instruction client I believe that commoditisation and a fixed fee is where the future of mainstream legal services lie.
Stephen Lucas is ICT director at Barnetts Solicitors
Date: 1st, April, 2009
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