Private client special report: the two faces of commoditisation
30 January 2009
20 November 2013
21 October 2013
26 February 2014
2 September 2013
2 September 2013
In recent years there has been a sweeping tide of change in approaches and attitudes to providing legal services. Commoditisation has hit the legal world with a force which has struck alarm. One fact however, seems indisputable: commoditisation in all its forms is here to stay.
The essence of this sea-change focuses upon services being available across the market, from a variety of suppliers and at competitive market rates. It has been this last point in particular which has led many to bulk at what now appears the inevitability of a smaller world. What should be the reaction of solicitors in this increasingly competitive environment? How does the practice of law retain its integrity in an era of packaged products? How should we learn to accept and even welcome these new trends?
Firstly, it is prudent to retain a sense of realism about the changing pace of life and ever-growing levels of consumer expectation, no matter what the offering or the market! New entrants to the lucrative arena of ‘traditional legal services’ are fully aware of this and are prepared to remain competitive to the last, including branching out wherever possible from providing a Wills service for example, to legal work across the broad. Inevitably, new entrants to the market may commence with pioneer services such as residential conveyancing and wills but will be sure to quickly move up the profit chain once established.
The second step might be seen in actually concentrating more on the complementary nature of what are two distinct and seemingly conflicting approaches. A new fast-paced world will demand fast-paced and often imaginative solutions. Thus, the reality is that a corporate client, for example, one seemingly in need of bespoke services, will often require certain ‘commoditised’ work as well. In this respect, what appears to be a sort of philosophical and practical binary, will in fact usually overlap in the operation of providing what is fully demanded by the client. It is this which is central to the reconciliation of the two - in essence keeping all commoditised and other services in check by continually revising the client’s overall needs whilst embracing cost-effective and up-to-date solutions. Furthermore, it is essential to the client’s trust in their provider that law firms are seen as not only adapting to, but willing to adapt to change. It is this which I believe will be crucial in differentiating those who will enjoy future success and those who will be irredeemably left behind.
At the same time however, it is important not to induce a sense of general panic, as, in many ways, these ideas are in fact nothing new. Standard documents and letters are and always have been used as commonplace practice and it is arguable that commoditisation is purely a further evolution of what is already accepted. Indeed, standardised documents are crucial as tools to ensure consistency and most importantly, profitability. This is a position few would argue with. In fact, much corporate/commercial work, although usually viewed as ‘traditional,’ utilises a wealth of standardised materials, from standard letters to contracts. This evolved naturally over time and its increasing pace is simply a reflection of the electronically-driven, wider environment. Indeed, clients themselves are usually perfectly at home with gathering electronic information and sometimes even prefer the more painless way of asking questions of their solicitor across the internet rather than engaging in face-to-face discussions. This is a reality of forces outside everybody’s control.
What is interesting is that Private Client work, certainly one of the more traditionally personable areas of legal practice, may in fact be at the forefront of embracing these changes. This is essentially because the Private Client product is largely the same animal across the board. Indeed, what usually differentiates the service is the person delivering it! Thus, despite standardisations, it is still seen as and is always fully engaged with the client’s individual needs. In this vein it should be possible to offer a whole range of highly accurate standard documents, such as trust deeds for pensions, life assurance, declarations of trust and even probate services, all of which maintain profit and client satisfaction. It is predicted that Private Client work will be one of commoditisation’s success stories, suggesting that its introduction into the mainstream should in fact be far less painful than feared.
It is perhaps fair to state however, that the big question which remains is exactly how profitable commoditisation may be. The answer to this is simple: only time will tell. However, judging from the use and economic benefit gained from already standardised documentation it would seem that realistic pricing, coupled with an efficient customer-based service is the key to any effective, modern and highly successful law firm. Commoditisation is here and the time to respond is now.
Michael Alden is a partner at Ashfords.