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30 April 2014
As the LegalTech London conference, held in association with The Lawyer, gets underway this week, John Hokkanen gives tips on how to bring your firm up to speed with the new dotcom culture. John Hokkanen is internet strategist at US firm Baker & Botts.
Many lawyers feel that their firms are under attack from both above and below as the internet creates all sorts of opportunities for global expansion.
The large consultancies with interdisciplinary practices loom above. For the largest firms with global practices, these competitors pose a serious threat. Though their internal cost structures are, like most international law firms, expensive, they offer to add value by leveraging their vast network and internal capital. Consequently, they are investing large sums in their internal knowledge management and internet strategies.
Meanwhile, smaller firms can see, if not yet feel, the presence of new internet entrants whose goal is to remove lawyers from processes that have traditionally been theirs. For example, The Company Corporation (www.incorporate.com) will facilitate the creation and filing of corporate documents and for a small fee will act as a registered agent. Cybersettle.com and Self Settle seek to allow a claimant and insurer to resolve a dispute without the involvement of a lawyer, thus allowing them to split the savings and pay the internet service a fee.
Web-based corporate compliance training programs are yet another example. Though such services do not specifically involve the practice of law, the profession should expect medium and large law firms to soon go after national markets in specialised practices through the online medium.
Lawyers often ask, "What is the road map to begin thinking through these issues?" The answer varies with each firm, depending on the practice composition, its marketing methodology, the inefficiencies within the practice, and the willingness of the senior partners to learn new tricks and invest their money.
One should not necessarily be alarmed at the changes. A firm with market share dominance and critical relationships may well have powerful barriers to entry that other firms will not tackle. But partners should have equal candour about whether or not their internal processes have inefficiencies that are costing their clients money and whether new competitors might exploit these cracks in the process to achieve a foothold in an otherwise insurmountable barrier.
To begin your firm's internet strategy, the senior management should probably read at least a dozen books on the subject. This process will encourage the innovation quotient of your management to think through how competitors might view your market.
After such reading, developing a business plan is probably the most important task. It will provide the framework for your firm to assess the market, its revenue potential (whether it is worth the investment), the status of potential competitors, and the barriers to entry.
The firm ought to plan on investing revenues or creating a start-up that will take investors. The latter should focus on business-to-business opportunities because they will be an easier investor play than a business-to-consumer model. Focus on simple transactional opportunities if possible, the revenues will fuel the engine. Create an understandable pitch to investors and prove the value of the model.
Finally, think through how your firm is going to attract and retain really smart people. If you assume that will not be a problem then think again. US internet businesses are people-constrained not idea-constrained. US law firms find many of their best and brightest e-business lawyers leaving for dotcom companies. Stock options aside, the internet space is uncharted and extremely stimulating. While you must make it financially worthwhile, you must also convince them that your organisation is a worthwhile framework from which to build their career. Underestimate these brutal realities and your best-laid plans will go nowhere. To build a high-performance sports car without the talent to build and drive, will never work.
The internet is an important inflection point in world business. It is fuelling globalisation in ways that just a few years ago, we could not imagine. Law firms, as part of professionals that service business, can get their share as well. But it requires planning and diligent execution of that plan. Is your firm working on its internet strategy?
The LegalTech London conference takes place at the Barbican on 17 and 18 May. For more information call the hotline on 07000 763 896