Are you paid enough for the risks you take in your law practice?

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“The choice isn’t between success and failure; its between choosing risk and striving for greatness, or risking nothing and being certain of mediocrity.” — Keith Ferrazzi

Every day you make decisions in your law practice. You’re usually right but sometimes you make a mistake. It’s okay because when you make a mistake, you can usually fix it. If you can’t fix it and your client suffers a detriment, you have insurance.

Your clients pay you to make decisions. It’s what you do. It’s what you get paid for. Every time you make a decision, however, you take a risk. But are you being compensated for those risks?

In business, the bigger the risk, the bigger the potential reward. When you are the principal, your fortunes rise or fall on the outcome. As advisors, however, we are paid by the hour or the case or the work product. Other than contingency fees, our compensation is almost never commensurate with the risks.

You prepare a “simple” will. You get paid a few hundred dollars. But what if the client needed something different? What if you leave something out? Hundreds of thousands of dollars could be are at stake, but you are paid a few hundred dollars.

It seems to me we should be paid according to the risks we take in our work. Our insurance carriers are. Our business clients are. But we are not and we probably never will be. We can’t charge thousands of dollars for a simple will.

But while we probably won’t get paid more for taking risks in our legal work, we can get paid more for taking risks in our marketing. Ironically, these are risks most attorneys avoid.

If you want to reap bigger rewards in marketing your services, you need to take bigger risks.

Time, money, ego–invest more, risk more. Yes, you might waste that time or money, or take a big hit to your ego. But you might also get rich.

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The paperless law office: what’s the big deal?

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I like the idea of going paperless. I think most people do. Millions of people have opted for paperless billing and banking, reducing the paper and clutter in their lives and saving on postage and fees. Millions more are investing in scanners to eliminate paper that resides in their closets and file cabinets.

Lawyers in particular, who have more than their fair share of paper, are coming to understand the benefits of a paperless law practice:

  • Saving money. A paperless practice saves the not inconsiderable costs of paper, copy machines, toner, file cabinets, office space, and storage space, not to mention the wages of staff members responsible for creating, storing, and retrieving all that paper
  • Increasing productivity. Digital information can be retrieved, and therefore, utilized, much more readily than paper files. And having information in the cloud means it is available to you anywhere–from home, office, the courtroom, in a meeting.

Converting a law practice to paperless, or even “paper-lite,” is not a simple task for most lawyers. First, there is the process of converting thousands of closed files to their digital equivalents. Then there is the issue of working with current files and open cases using a laptop or iPad instead of a manila folder. How do you get the information in, and how do you get it out? All of this has to be thought through before the first page is scanned. Finally, lawyers must consider the security of client data, both on their hard drive and in “the cloud”.

The larger your practice, the more complicated these issues become. A big practice will probably hire a consulting firm to advise them on the process of going paperless and selecting the tools for doing so. A smaller practice must address the same issues as the big firm but they have more options, many of which are free or low cost.

I wrote about “going paperless” and “data security” in my new eBook, Evernote for Lawyers: A Guide for Getting Organized & Increasing Productivity. If you want to eliminate or reduce the use of paper in your law practice, Evernote is a great tool for doing so. If you are a small firm, it could be all you need.

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Attorney marketing video challenge

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attorney marketing videosAbout a year ago, I wrote and “produced” a simple video about a new lawyer attending his first ABA Convention. This was around the time the ABA was considering new rules to regulate attorneys behavior online and the video played off that theme and an ad hoc write-in campaign to tell the ABA to back off.

The ABA didn’t go nuclear on us, but I don’t think my video was the reason. What my video did do was get a lot of attorneys watching it and sharing the link with others. I got a lot of traffic from it.

No, it wasn’t a big hit on youtube, but in my niche market, it did okay.

My challenge to you is to create your own video and put it on youtube and on your blog.

You can use the free service I used, Xtranormal, which allows you to give voice to animated characters. Or, you can act out a skit with other live “actors”. You can narrate slides on your desktop, or simply talk into the camera.

Your best bets for going viral are to use humor or to take a controversial stand, but I would stay away from politics. How about a funny commercial by one of your “competitors”? Or something about one of the new laws that take effect in January?

Anything goes, but remember, your clients are watching (and so is the ABA!)

Keep it under five minutes. Watching my video today, I realized I could have achieved the same effect with a much shorter spot.

You may not see a ton of results from your video but you will learn some things that might allow you to create another video that does. And you’ll have a lot of fun.

Send me the link to your video. I’ll choose a winner and feature it in a future post.

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How to get your clients to help you increase your law firm’s profits

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client interviews, surveys and law firm auditsIn his report, “What’s Hot and What’s Not in the Legal Profession,” posted last week, Bob Denney said that one of the trends that was heating up in the marketing and business development area is “client interviews and audits”. He said, “More firms are recognizing, however slowly, that the feedback and information obtained from them–particularly when they are conducted by knowledgeable outside consultants–are critical in strategic planning and development of growth strategies.”

Asking your clients how you’re doing and what you can do better is the best market research you can get, and it’s free. Not counting the cost of the outside consultant.

There’s no better “intel” than that from someone who actually paid money to hire you.

Using outside professionals to do the surveys is also good advice. A firm that specializes in this kind of research will ask the right questions and they will know how to critically evaluate the answers. And using an outside service instead of doing it yourself will undoubtedly provide more honest feedback.

If you don’t want to hire an outside firm, interview your clients anyway. The feedback may not be as accurate but it’s better feedback than you’re getting right now.

Client interviews can help you learn what you are doing well and what you can do better. They can help you improve client relations and communications. And they can help you discover new marketing opportunities. All you have to do is ask.

Surveys are an easy alternative to interviews. You can post them on your web site, using free sites like www.surveymonkey.com and www.polldaddy.com. By providing anonymity, clients will be more likely to respond honestly. Open-ended questions can lead to some surprising discoveries. Multiple choice questions can help you identify patterns that deserve your attention. If 70% of your clients say you need to communicate with them more often, that’s something you cannot ignore.

At the very least, call a client today and ask them how you’re doing. You never know what you might learn and what you learn could earn you a fortune.

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2012 Legal Industry Predictions: Bob Denney’s Annual Trend Report

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legal industry tends and predictionsWhat’s hot right now in the legal industry and what trends can we expect to play out in 2012? For 23 years, Bob Denney has made that call in his report, “What Hot and What’s Not in the Legal Profession.” Here in its entirety is his latest report.

This is our 23rd annual report on what’s going on in the legal profession, not only in the United States but also in other parts of the world. Like all our previous reports it is based on information we compile throughout the year from many sources, including discussions with leaders in the profession. As always, some of our findings are obvious but they still must be included. Others are surprising and some are contrary to the Conventional Wisdom. Nevertheless, this is the picture at the beginning of 2012, a year which may well hold both economic and political surprises.

PRACTICE AREAS

RED HOT:

  • Banking. Perhaps the hottest area in Financial Services due to uncertainty if the “Volker Rule” will be implemented this coming July when regulations that are part of Dodd-Frank take effect.
  • Health care. A broad area that includes regulatory, finance, M&A, real estate, labor & employment and professional liability. Regulatory may become red, red hot. The Supreme Court’s ruling on the Patient Protection and Affordable Care Act, expected by June 30, will be a legal, as well as political, flashpoint.
  • Energy. Oil, coal and gas in certain parts of the U.S. as well as Canada. Regulatory, land use and litigation are particularly hot in Ohio and Western Pennsylvania because of Marcellus Shale. Nuclear power is getting hot due to safety concerns in the U.S. but alternate energy may be cooling somewhat.
  • Intellectual property. Due to patent reform (“First-to-file”) but mostly for start-ups and smaller companies since large companies were already on a FTF system because of their global operations. Patent Litigation is becoming red hot for most firms while rate-sensitive patent prosecution work is being reduced and even eliminated in larger firms.

HOT:

  • White collar crime. Internal investigations due to fraud continue to increase. Adding fuel to the fire are new issues relating to the disclosure of inside information on social media.
  • Regulatory. Many states are passing laws in opposition to federal regulations, particularly in health care, energy, banking and environmental. Constitutional issues are beginning to arise.
  • Financial services. Mergers and acquisitions. Venture capital. Private equity. As a result, IPOs are really red hot right now—since about 200 companies have filed this year, the largest backlog in more than a decade. However, some experts say new issues will cool down in 2012.
  • Cyber crime. Due to growing hacking and security issues at computer networks.
  • Labor and employment. On both the labor and management sides. Violations of wage-and-hour laws are increasing. Collective bargaining is a hot issue. Right-to-Work is heating up. Some L&E departments have added immigration lawyers.
  • Commercial litigation. In addition to patents and white collar crime, regulatory, insurance, health care and retail/wholesale cases are hot. Some experts and GCs report a big increase in “bread-and-butter” cases—some call it “law factory work”—and a steady decline in “bet the farm” cases. The decline in cases going to trial continues, resulting in more Alternative Dispute Resolution. Also see “Online ADR” under “Other Trends and Issues,” below.
  • Immigration. With some exceptions, BigLaw and even MidLaw firms leave this to firms that specialize in it.

GETTING HOT:

  • Commercial real estate. Some investors are buying individual loans and real estate owned (REO) properties taken back by the lender after foreclosure. Others are buying or building multi-family residences to capitalize on the booming rental market.

GEOGRAPHIC MARKETS

  • Washington, DC. “The British are coming! The British are coming!” Four and perhaps all of the U.K.’s top five firms – the so-called “Magic Circle” – are opening offices here in an attempt to build U.S.-based regulatory practices. This is part of their broader strategy to enter the U.S. market in a big way.
  • Texas, particularly Houston. The British aren’t coming – at least not yet – but the energy business continues to attract more U.S. firms to open offices here.
  • BRIC countries (Brazil, Russia, India, China). As we stated in last year’s report, they continue to be regarded by global firms as major growth opportunities. But see “Challenges to Globalization” under “Other Trends and Issues” below.

MARKETING AND BUSINESS DEVELOPMENT

HOT:

  • Social media. Hotter than ever. As Deborah McMurray pointed out in her recent blog, it “is driving business and influencing it.” Legal marketing expert Larry Bodine sees huge potential for Google+ in marketing. However, some firms are starting to encourage more in-person relationship building instead. Also more firms continue to develop social media polices to prevent ethical as well as legal violations.
  • Experience databases and KM. Also hotter than ever. This is why Content Pilot, McMurray’s strategy and technology company, developed Velocity, a mobile app to quickly provide information on a firm’s experience and expertise.
  • RFPs. In the words of one CMO, “They are pouring in to big firms.” As a result, proposal automation apps that automate the RFP process continue to be hot.

GETTING HOT:

  • Educational online video. In his post on Attorney at Work, Bob Weiss says these are an excellent opportunity to build a practice.
  • Return on investment. Firms are paying increasing attention to this. One example: Susan Greene, Marketing Director at Becker & Poliakoff, constantly evaluates goals and spending to measure the marketing ROI.
  • Recruiting and marketing. Recognizing the relationship of the two functions, Benesch, Friedlander, Coplan & Aronoff has elevated CMO Jeanne Hammerstrom to be in charge of recruiting as well.
  • Client interviews and audits. More firms are recognizing, however slowly, that the feedback and information obtained from them—particularly when they are conducted by knowledgeable outside consultants—are critical in strategic planning and development of growth strategies.

OTHER TRENDS AND ISSUES

  • Firm management. As discussed in our November Legal Communique, in addition to DLA Piper’s bringing in an outsider to co-chair, some MidLaw firms are bringing in non-lawyer business professionals as advisors—an interesting and encouraging trend.
  • Revenues and profitability. According to various reports, since 2008 total revenues as well as revenues per lawyer (RPL) have been flat or even down for many firms in the AmLaw 100. This may be one reason for their reporting profits per partner (PPP) instead. Now CitiBank recently reported that revenues and profits will be down this year for a high percentage of AmLaw 200 firms. However, in most . . .
  • MidLaw firms revenues as well as RPL continue to increase and their PPP are on budget if not exceeding it. As we have been reporting, these firms are growing by attracting work from large clients who won’t pay BigLaw rates, even with AFAs.
  • Fewer partners. BigLaw firms in particular are promoting fewer associates to partner. They are also making the partnership track longer and the requirements tougher. Legal pundits say this is probably a permanent change that will continue even after the economy recovers.
  • Fewer entry level associates. Although summer associate hiring has generally increased for 2012, some BigLaw and also MidLaw firms plan to hire fewer first-year associates than they did before the recession. Instead, in addition to recruiting lateral partners, they are recruiting two- and three-year associates who don’t need several years of development before they are profitable. However, a few MidLaw firms report that, despite offering lower salaries, they are now able to attract high-quality 3Ls who would have gone to BigLaw firms in the past.
  • The new leverage. The age-old principle of leverage, a high ratio of associates to partners, is steadily dying out. As I discussed in the September/October 2011 issue of Law Practice, it is being replaced by a “New Leverage” based, not only on associates, but also on other forms of leverage—temporary or contract lawyers, paralegals, process management specialists and by the outsourcing of functions such as legal research, e-discovery and document management. This trend is not restricted to law firms. Many corporate legal departments, faced with senior management directives to reduce costs, are doing the same.
  • Non-lawyer competition and deregulation. A mid-year post on the Kowalski and Associates blog stated that “non-lawyers and corporate entities not owned by lawyers are actively delivering almost $2,500,000 in legal services through LPOs and Internet providers of legal services.” New model firms such as NovusLaw and Legal Zoom are just two examples. This trend is resulting in a groundswell of cries for deregulation. However, in a letter to the editor of the New York Times after it ran an op-ed supporting this trend, ABA President Bill Robinson, stated that “A rush to open the practice of law to unschooled, unregulated non-lawyers … would cause grave harm to clients.” Stay tuned. This battle over deregulating the practice of law will continue. The Jacoby & Meyers suits were just one example. Keep in mind that other professions, such as accounting, architecture and medicine, have already found answers to this issue.
  • Globalization. Continues but is getting more complex. In a recent Ark Report, Leigh Dance, President of ELD International, describes a “multi-polar world” in which a growing range of legal services must be delivered to multiple geographic markets. But she says there are alternatives to opening offices everywhere and also that emerging markets are growing faster than mature markets, i.e., the U.S. and Western Europe, and will continue to grow, particularly in Asia.
  • More on globalization. Global growth is not limited to BigLaw firms. Liaisons, affiliations and networks offer opportunities for MidLaw and even SmallLaw firms to grow internationally. Also the ABA Commission on Ethics 20/20 has posted draft proposals to make it easier for U.S. lawyers to engage in cross-border practice. But there are also . . .
  • Challenges to globalization. As reported by Anna Stolley Persky in the NovemberABA Journal, “U.S. law firms face an increasingly competitive—and often protectionist—legal environment when they seek to extend their operations overseas.” Some countries, such as Canada and potentially the U.K. and Australia, have few restrictions on foreign lawyers practicing. But others, including the BRIC countries, have significant restrictions. For U.S. firms there may also be another challenge to globalization which is …
  • Capital. Since growth requires capital and, except in Washington D.C., U.S. firms may not have outside investors, will even the largest firms have sufficient capital to fund global growth? Historically, compared to other businesses (yes, a law firm is a business!), law firms have needed relatively little working capital which, in most cases, they have been able to obtain through short-term line-of-credit loans or off-balance sheet leases. However, for BigLaw firms this may change in the future as a result of their emphasis on growth and the resulting need for capital. Adding to the pressure are the U.S. growth plans of U.K. firms, which now have access to outside capital as a result of the Legal Services Act. This issue of non-lawyers having ownership in U.S. law firms will continue to heat up.
  • Mergers. After declining in 2010, mergers have increased substantially as firms shift from a survival mode to a growth mode. Most legal experts expect this to continue. However, in the past as many as 50 percent of the mergers fail because, as I discussed in the October, 2011 issue of Law Firm Partnership & Benefits Report, there are many challenges and adjustments that need to be made if a merger is to succeed.
  • Alternative fee arrangements. Lots of talk and some interesting action. Pfizer’s program with 17 selected firms is noteworthy, including its mandate that neither in-house nor outside lawyers are permitted to mention hours. But there is . . .
  • More on AFAs. According to Fulbright & Jaworski’s Annual Litigation Trends Report, “Despite the growing use of AFAs … more than half of the larger companies [surveyed] and about two-thirds of the mid-size companies estimate they use AFAs for less than 20 percent of outside legal spend.” Furthermore, according to many firm leaders, the benefits and workability of AFAs are being questioned by clients as well as by firms.
  • Client satisfaction. The Fulbright Report also said respondents’ satisfaction with how well outside counsel meet their litigation needs in four key areas was between 17 percent and 21 percent for U.S. companies but over 50 percent for U.K. companies. Furthermore, in all four areas, “the figures are lower than they were in last year’s survey.” In view of all the emphasis firms are supposedly placing on client service, these figures, particularly for U.S. firms, are alarming.
  • Legal project management. More firms continue to retain outside consultants to help design and install LPM programs to deliver more value to clients and more profit to the firm.
  • E-Discovery. It is now becoming a necessity in many smaller cases which could well add cost and complexity to litigation.
  • Online ADR. General Electric’s oil-and-gas division is testing online dispute resolution by requiring thousands of suppliers to agree to cyrbersettlements in simple disputes. Right now the approach is being tested mostly in Italy. It will be interesting to learn the results and if GE expands the approach to other countries including, of course, the U.S.
  • Law school admissions. Responding to a poll by Kaplan Test Prep, 37 percent of 128 law school admission officers said they looked up an applicant on Facebook or other social media sites, and 32 percent said they had found something online that hurt an applicant’s chances of admission.
  • Law school job placement statistics. Last year, Villanova Law School admitted inflating the figures in its reports of jobs obtained by graduates. Now Michigan’s Thomas M. Cooley Law School, the largest in the country, and New York Law School have been sued on behalf of students and graduates demanding tuition refunds “and other remedies” for inflating post-graduation legal employment and salary statistics. Are these the only schools guilty of this? The lawyer representing the plaintiffs says “… this problem is not just confined to those two schools.” This could become a disturbing trend.
  • Associate training. Milbank, Tweed, Hadley & McCloy is taking it to a new level. Harvard Law and Business School faculties, with assistance from firm partners, conduct a program for third- to seven-year associates. Subjects include business, finance, personal development and leadership.
  • Succession planning. Although a growing number of firms are addressing the issue, it is becoming even more of a challenge. Some older partners are not retiring because they need to continue working for obvious economic reasons.
  • Legal services corporation. A subcommittee of the House Appropriations Committee has recommended a cut from the $404 million LSC received this year to $300 million in 2012. ABA President Robinson stated this is a “draconian cut” because one out of every two people seeking legal services is now turned away by LSC.
  • Medical-Legal partnerships. According to CNN Money, MLPs provide legal services to patients in 200 hospitals and clinics throughout the U.S. In what is considered a major commitment to expand free critical services to more patients, Wal-Mart’s legal department is now providing free legal services for patients at the Arkansas Children’s Hospital. This is described as the first such partnership between a large corporate legal department and a major hospital. In view of the situation at LSC, we hope this trend continues.
  • Mothers-in-the-Law. Since it was founded in Seattle in 2006 to address the home-work conflict that exists for mothers in law firms, the Mother Attorneys Mentoring Association (MAMA) has grown to more than 550 members in six cities. Another 25 chapters are now being developed.

There has been much talk about the “New Normal” in the legal profession. Yet some of these trends and issues, such as pressure to kill the billable hour and replace it with AFAs, are not new. Others, such as involving outsiders and non-lawyer businesspeople in firm management, are new. But, whether old or new, will they really become “normal?” That remains to be seen.

Bob Denney is President of Robert Denney Associates, Inc. He says “it seems like forever” that he has been providing counsel on management and growth strategy to firms throughout the United States and parts of Canada. The complete annual “What’s Hot and What’s Not in the Legal Profession” is available as a download on his firm’s website, www.robertdenney.com. Contact Bob atbob@robertdenney.com if you’d like to be added to his mailing list and receive quarterly trends updates.

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Can you imagine a world without lawyers? I’ll bet Amanda Knox can’t.

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Lawyers are routinely vilified. Epithets abound. We are the subject of the cruelest jokes.

And yet, where do people turn when they are in trouble? Whom do they go to for advice when they want to protect their rights? Who defends the indefensible?

Amanda Knox was just released from an Italian prison after a four year nightmare. Without lawyers, she would still be languishing in her cell.

Without lawyers fighting the good fight, our rights, our entire way of life, would devolve and anarchy would ensue. We must never forget how important we are, not just to the individuals we serve, but to the society we live in.

In Shakespeare’s Henry VI, Dick the Butcher says, “The first thing we do, let’s kill all the lawyers”. This is often quoted as a denouncement of lawyers but it is a misreading. Dick was referring to ways a rebellion in the planning might be successful. He recognized that to succeed, they must get rid of those who know and enforce a system of laws. It is, in a roundabout way, an endorsement of lawyers.

Lawyers, be proud of what you do. Defend not just your clients but your profession. Educate your clients and your friends about what you do, but also why it matters.

But don’t stop there. When you see a colleague behaving in a way that belies the dignity of our profession, call him on it. Counsel him. And, if necessary, report him.

Be a champion of the high standards our oath demands and exemplify those standards in your words and deeds. Our profession must police itself. The alternative is a Bar that does it for us, but too often, they go too far.

In a victory for common sense, a Florida court just struck down as vague one of its Bar Association’s limits on lawyer advertising. A bar association should enact rules of professional conduct that define standards of behavior and it should provide redress for the most egregious transgressions of those standards. But when a bar association imposes vague, arbitrary, and unreasonable standards upon its members, as Florida has long been criticized for doing, it says to the world, “We don’t trust our members and neither should you.”

Bar associations can improve the image of lawyers not by policing them more but by trusting them more.

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What if you really could learn how to practice law in law school?

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Two law professors have come up with an admittedly radical proposal, designed to help law students learn real world lawyering skills before they graduate: law schools that operate their own law firm.

The idea is akin to what doctors do by working in teaching hospitals. You get hands-on experience working on real cases for real clients, under the supervision of real attorneys. What’s radical about that?

Clearly, law students need the experience of working with real clients, and maybe I’m missing something, but how is this idea better than working as a law clerk while you’re in school? Instead, why not simply mandate so many hours of clerking experience during law school, and possibly after, as a condition precedent to issuing a license?

Everyone knows that law schools do a poor job of preparing graduates for the actual practice of law. I’m willing to hear more about the law school firm idea but right now, I say let law schools teach theory and law firms teach practice.

A comment to the ABA Journal’s post about this story sums it up best: “For 70 years, law schools have “trained” lawyers how to be not ready-for-prime-time. What makes you think THEY know how to practice law. More ivory tower fantasy.”

What do you think? Is this a good idea?

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Rocket Lawyer, Legal Zoom: How the Online Law Business Affects Your Business

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The success of Legal Zoom, the online legal forms service which advertises heavily on the web and on talk radio, has apparently demonstrated that there is money to made in the low end of the legal services industry. Wherever you find money, you’re sure to find Google, which recently invested in Rocket Lawyer, the newest contender in this growing market.

What does this mean for your practice?

For most lawyers, the answer is “not much”. Online legal services are still small relative to the size of the market and inasmuch as they primarily provide forms and access to inexpensive legal advice, provide no direct competition. Unless of course your practice targets the same lower end of the market and in today’s economic climate, more and more attorneys are doing just that.

I don’t have a crystal ball but here are a few of my predictions:

  • No matter what the economy does, the online legal services industry will continue to grow and continue to take business from attorneys who offer commodity-level services to consumers and small businesses.
  • Attorneys who continue to target the low end will find it harder to compete with the simplicity, speed, and lower costs available online.
  • The attorneys who survive this trend will be those who (a) abandon this market altogether, in favor of higher level services (e.g, “asset protection” vs. “simple Wills”) or offer services where the hands-on advice and ongoing involvement of an attorney is mandated, or (b) get very good, and very creative, at marketing and finding under-served niche markets where they can carve out market share.
  • The growth of online legal services will expand the overall legal services marketplace, ultimately leading to more work for all attorneys. How that work is distributed and at what price points is the multi-billion dollar question.

Never fear competition. Embrace it, learn from it, prepare for it. Competition will make you a better attorney and, in the end, make you more money.

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