Latent market still untapped

When Richard Susskind, in his seminal work The Future of Law, posed the question  “can we honestly believe those who want legal assistance will be content to arry on with traditional one-to-one, across-the-desk, advisory legal service delivered in the time-honoured, consultative fashion on an hourly-billing basis”, and responded “I am sure not”, we could by now have expected a profession radically transformed, and in particular one which would have accessed “the latent legal market, liberated by the availability of straightforward, no-nonsense, online legal guidance systems”.

In fact, all evidence suggests the latent market has yet to emerge and, contrary to expectations, the legal profession in its current form has survived in this wired world.

Richard Cohen, co-founder of Epoch Software, says things just haven’t moved as fast as was anticipated – by now those operating in the legal IT industry expected a much more concerted effort by law firms to find the latent market.

“The Internet market hasn’t moved as fast as predicted, I’m not entirely certain a latent market as we anticipated it, actually exists. The theory was if solicitors brought down the price of making a will to say £10 or £20 online, then they could create that market. Information is showing that it’s not a price point thing, price reduction doesn’t necessarily increase the propensity of take-up.”

He predicts, however that during 2002 the latent market will begin to emerge.

“Insurers and others involved in the financial services industry for example will offer on-line legal services as part of  their offering, almost thrown in as a free add-on. People still see legal services as a duress purchase, the last person you want is to see a lawyer. “In selling over Internet, customers only need to find a solicitor when they want to make that duress purchase.”

For Cohen, bundling services is key; the latent market can be tapped by large financial services organisations. If the latent market is unearthed by big institutional firms, then there will be a detrimental knock-on effect for high street firms.

Gerry Sinclair, who chaired Update’s recent Nothing but the Net Conference, agrees that the latent market has yet to truly emerge.

“Clearly experience and research would now suggest that the public are not yet ready to purchase their legal services online. The market is still in its infancy, and is not yet sophisticated enough to trade online. It will take both an improvement in the reliability of the Internet, and a rise in the public trust of the security of the net, before such a market can be both created and encouraged to obtain services through the medium.”

Sinclair, who is coming to the end of a two year secondment as managing director with sports management company 110 Sport Limited, says the “drive for IT is inevitable, and will eventually be client driven if firms are not pro-active.

“Initially the large commercial firms will feel this pressure first, and this has already begun, with financial institutions and large multi-national companies expecting to be able to communicate and correspond with solicitors over an extranet, and often using their own software packages. In time, however, all firms, both large and small, will be expected to communicate in this way by bodies as diverse as the Register of Scotland, Companies House, The Scottish Legal Aid Board and the Scottish Courts Administration.”

Charles Christian, former barrister and now a legal technology commentator and publisher of the influential Legal Technology Insider, is sceptical if the latent market exists to make mass purchase of online legal services a viable proposition.

“There is simply not the volume demand for online legal services - if you talk to smaller firms that have installed similar services you will get the same story - thousands spent on IT to win a handful of budget price customers a year. Real people still like real people to deal with legal problems.

“There no doubt are people who are alienated from the current legal system but dressing up legal services in an online guise will not win them over, they simply will continue to never use lawyers. For example, look at the huge numbers of people who still don’t have a will.
“My own view is that alternative legal service delivery mechanisms – such as online legal services – do not expand the market (by unlocking the latent market) but merely cannibalise the existing market, channeling work away from traditional high street firms.”

Doug McLachlan, Development Director of Axxia, suppliers of legal IT solutions, doesn’t think Susskind got carried away in his prophecies about the future delivery of legal services - because he didn’t ever put a timetable on when his radical vision of the emerging latent market would materialise.

“It’s really all about process. We didn’t see the delivery of legal services as announcing the death of the high street solicitor, more as the transformation, offering improved methods to deliver. The consumer still wants counselling, hand-holding and reassurance, all of which are difficult to do online.

“The process of streamlining IT allows reduction in cost for the end-user. In fact, it might help the resurgence of the high street law firm, if you follow the logic of the Tesco model, where big warehouses deliver bulk goods, but people still need the fresh produce from the store.”

The gap between big and small firms continues to grow despite some predictions that the Internet could narrow the divide; research shows while large firms need to spend two per cent of gross fee income on IT, a medium sized firm must spend three per cent to get the same IT resource.

But do some firms invest in IT just to keep ahead of the competition, without really considering exactly what they are trying to do with it?

“ IT should be utilised to give businesses a competitive advantage but if clients are not asking for it, think carefully. Insurance companies will demand extranet facilities and won’t use firms who don’t have that facility. In essence, it’s all about knowing your clients.”

Some firms are reluctant to commit to that sort of outlay, especially where they don’t feel that case management packages are offering the solutions they seek. According to McLachlan, the key to making good use of software packages is to harness the technology, while ensuring human interaction is still part of process, to facilitate a high speed, efficient transaction. Firms  who expect too much from  their  case management systems  must learn to adapt to what  is  out there. So is it worth investing further in anticipation of the latent market?

“Legal services are a distress purchase. We don’t expect a doctor to be expert in everything. Eventually they will be using technology for diagnosis, and the high street law firm will be doing similar things, calling up a screen with information on hand to offer bespoke advice.”

Do solicitors expect too much from case management packages? Charles Christian thinks so.

“They always want a system that “fits in with the way we work, not vice versa”. Whereas if you are ever to gain any real productivity improvements, the installation of IT should change the way you work, to automate or transform your business processes and

workflows. Simply adding computers to the equation without changing the processes merely increases your overheads - at its worst it results in qualified staff working as the world’s most over-paid data entry clerks. I suppose one problem is that suppliers always oversell these systems to give the impression they are an out of the box solution not involving any real management rethinks.”

In general, is his perception that the legal profession are finding it difficult to change their business practices and procedures to embrace IT, with too great an element whereby they buy hardware without really thinking through clearly what they want to do with it?

“Many firms still have the accounts machine and typewriter mentality - which is primarily what most firms still use their IT for (ie accounts and word processing). IT is something you begrudgingly upgrade every five or six years and then forget about until the next time.

“One problem is that lawyers are reluctant to accept that they are now running a legal business. Traditionally you got to be a partner and/or senior partner by being good at law. But today you also need business, IT, marketing and people skills to run a successful practice - unfortunately most lawyers believe that because they are good at law, looking after the commercial aspects of running a firm is also well within their capabilities. Wrong.”

At the Nothing but the Net Conference at the Glasgow Science Centre, some solicitors expressed frustration at the limitations of the case management packages in which they had invested considerable capital. Could it be that this experience will be an impediment to further, necessary, investment? Gerry Sinclair again.

“The biggest mistake with any software package is to expect it to be all things to all men (i.e. bespoke for your own personal needs and wishes). The second biggest mistake is to think that you and your staff will be able to use a new software system after a short training programme. Training should be continual, structured and constantly updated to provide the best chance of delivering the type of performance one expects from a case management package.”