HOW ATTORNEYS CAN AVOID THE COMMODITY TRAP

The Internet has broken down the barriers to accessing legal help. As a result, people increasingly believe they don’t need a lawyer to handle their legal issues. And because markets always follow the demands of customers, your potential clients are actually the ones driving the commoditization of legal services. I’ll explore these changes and how you can take advantage of the commoditizing attributes your clients love.

Here is The Social Lawyer Show podcast version of this blog for easy listening on your commute or while you are walking your dog, or yourself…

LAST WEEK

Last week I talked about being streamlining your practice by STREAMLINING & OPTIMIZING YOUR LINKEDIN PRESENCE . Whether you build your business on referral/word of mouth or rely more on engaging with your prospects through various online channels, DON’T let an online presence – often the very first introduction – diminish all your hard work that is your reputation.

THIS WEEK WE’LL TAKE A LOOK AT HOW ATTORNEYS CAN AVOID FALLING INTO THE COMMODITY TRAP

As an attorney, you’ve devoted much of your life to get where you are today. You went to law school and spent countless hours studying. You slaved away for months preparing for the bar exam, and you passed. You’ve worked long hard hours in practice, building up your skills, knowledge, and experience. You’re highly qualified, highly educated…an expert. Very few people have the intelligence and determination required to achieve what you’ve achieved. And for that reason, it’s easy to see why a lot of attorneys cringe at the idea of legal services becoming a commodity, but I see this happening all too often.

Here’s why I think this happens, and some lessons I’ve learned over the years to ensure my attorney clients avoid falling into commodity trap…

Lesson 1: Legal Services are Becoming a Commodity

According to Merriam Webster, a commodity is defined as “a mass produced unspecialized product.” All that hard work and dedication, and now you are selling a mass-produced, unspecialized product? Like oranges? Or widgets? A commodity!? It can be tough to hear. But, the practice of law is changing. Legal services are not what they used to be, and at a certain point, lawyers will have to find ways to adapt. 

Here is how solos and small firms can adapt to this trend and use it to their advantage, and how attorneys can avoid commoditizing themselves and their services. 

The Internet Has Changed Everything

Once upon a time, lawyers would bill clients by the hour for every little bit of work. Clients would pay a monthly retainer, plus additional fees for anything beyond the scope of that retainer.

This arrangement was justified because the law was largely inaccessible to non-lawyers. Legal services were being provided behind closed doors, and unless you had the means to pay, you didn’t get past that door. If you needed legal advice, you needed to hire a lawyer. There were no alternatives. Slowly but surely, the Internet has peeled back the curtain. The knowledge gap is closing as legal information becomes accessible to the general public. LegalZoom and other tech-based lawyer substitutes have emerged. The billable hour system has been exposed for its flaws, and even lack of ethics. Everyone in the legal community has observed these changes taking place. But many have failed to consider the impact these changes will have on their future careers and taken steps to prepare themselves. In order to do so, it’s first important to understand the underlying forces behind commoditization.

Lesson 2: Client Demands are Driving Commoditization

 The reason so many Do-It-Yourself legal sites have become successful is that most consumers don’t know the difference between downloading their will online and having it drafted by an attorney. They just want to feel as though their legal concerns are resolved quickly and painlessly (ie inexpensively). Unfortunately, working with a lawyer is anything but quick and painless. Hiring a lawyer is usually a painful process!

First you have to go out and find one with the right qualifications and experience. Then you have to get in touch with that person, which often requires multiple calls and emails and time spent waiting for a response. Next comes establishing the budget, which is inevitably more than you want to pay. It can take weeks by the time you are finally signing an engagement letter, and you haven’t even started resolving your legal issues yet! Who wouldn’t prefer answering some questions online and taking care of the issue in a matter of minutes?

Lesson 3: Learn to Use “Legal Services as a Commodity” to Your Advantage

You can’t fight commoditization. As discouraging as it may be, your years of hard work, knowledge, and practice experience are less meaningful to potential clients than they once were. So, realize you are in the business of selling legal services, and the people buying legal services, your customers, are demanding the attributes offered by commoditization. So, rather than resisting change or trying to ignore the impending future, focus on giving the people what they want!

How can you make your services more accessible to clients? How can you turn around work faster and improve efficiency? How can you increase your volume, and continue to deliver a high quality product along the way? Before you start thinking like a lawyer, stop, and think like a business owner. The point here is not that you should be cranking out underwhelming legal services and turning over clients at the fastest clip possible. Learn from the trend of commoditization, and find ways to streamline the delivery of  legal services to your clients.

The Weaknesses of Do-It-Yourself Legal Resources are Your Biggest Strengths

Think about your unique value proposition – why should a prospective client hire you, which takes twice as long and costs twice as much, instead of using LegalZoom? You know the answer to this question, but your prospective clients probably don’t.The biggest things missing from these commoditized lawyer substitutes are customization and guidance. LegalZoom can’t possibly address the multitude of complexities that can arise in even the most routine services. But you can, and you can also offer guidance and reassurance – the human touch – throughout the process. That should be your selling point.

You may not be able to compete with LegalZoom on price. But, if you can provide some of the other attributes offered by commoditized legal services and effectively communicate your value proposition, you’ll give people a more compelling reason to work with you over a technology based alternative. So rather than trying to put your blinders on to the inevitable development of tech based commoditization, learn and flip it…This is what I mean:

Figure out how to differentiate your service offering to give your customers what they value. Of course this means taking the time to get to know and truly understand your specific audience. Get creative, and above all, forget about billing for every hour and start selling your legal services more like a commodity.

Small Law Firms and Solos Can Benefit the Most

Small firms to mid size law firms may actually be in the best position to take advantage of the trend toward commoditization. I believe the future may be bright for solos and small firms if they can find ways to use (and learn from) commoditization to their benefit.

Compare a startup company compared with a giant corporation. Despite having far fewer resources, the one major advantage a startup has is agility – the ability to quickly implement new products and processes, test things out, learn from them, and make improvements in order to grow the business. In this new era of commoditized legal services, the small guys can benefit from having this nimble sort of “startup mentality,” while big law firms may struggle through a certain level of bureaucracy to adapt to rapidly changing customer needs.

The Internet gave rise to commoditization, so use it to your advantage. Find ways to use technology to acquire more clients online. Come up with new ways to package and sell your legal services in such a way that you know resonates with your specific audience.

Disruptive Patterns

The practice of law is changing rapidly and drastically following one of the worst economic recessions in US history. As cited in a recent Forbes article about how entrepreneurship is reshaping the legal industry, three of the major trends affecting legal practitioners today include the rise of online do-it-yourself legal service providers, the disruption of the law firm model and consolidation of large law firms, and the rise of entrepreneurship.

• Disruption To the Law Firm Model Will Continue:  From how people find lawyers, to how firms find talent, to how lawyers collaborate and provide legal services, there are many areas where the legal industry can be improved, leaving the door wide open for those who can spot an opportunity and provide a meaningful solution.  

• As these solutions continue to emerge, law firms will be forced to change in order to stay competitive. “It’s taken an earthquake of a recession to expose the inefficiencies that have long plagued large firms, including the widely despised billable hour and the pyramid structure. For the first time in a long time, disruptive change looms, and a growing number of law firm managers know they must evolve.  

• Overseas outsourcing of legal work is becoming more common. Onshore, new model firms that operate without the overhead and partnership of the traditional firm are cutting into law firm market share and handling complex, sophisticated work. Electronic discovery specialists and software companies are stealing much of the lowest level litigation work from big firms.  None of these alternatives existed at any meaningful scale ten years ago. And, we’re just at the beginning of the revolution.”

• Lawyers Will Continue to Become Entrepreneurs:  Whether by choice, or in reaction to the economy, the proverbial lawyer hanging up a shingle is back with an entrepreneurial vengeance.  And these days, running a start-up law firm is not too far from running a tech start-up, but with the added responsibility of regulation and ethical scrutiny.  “Lawyers are increasingly using social media, hosting blogs, speaking on panels and leveraging technology to build a practice on a shoe string and deliver high quality legal services to clients at a reasonable price.

• Lawyers have additional challenges like ethical regulations on marketing, ownership regulations which affect building your team, and financing issues that include many more restrictions than for non-legal companies. Lawyers have to learn to become subject matter experts, as well as marketing, sales, financing and operational experts to run a successful practice,” said Jennifer Hill, Startup Lawyer and Entrepreneurial Expert.

Key Takeaways: 

The key takeaways here are that consumers and small businesses will always represent a significant portion of the market for legal services. If you are a small firm or solo, you need to find better ways to service them, because they are most likely your primary market.

Rather than resisting or resenting the LegalZooms of the world, try to learn from them. You know your product is better than theirs, but the way you are delivering it to clients and billing them for it may not be. Think about what LegalZoom is doing that works, and find ways to bake those same qualities into your own service offerings.

Above all, focus on offering clients the attributes they value:

• Efficiency
• Accessibility
• Affordability
• Guidance
• Good Customer Service

As a solo or small law firm, you’ve got to take notice of the trend toward commoditization, and learn from it! The thought of legal services as a commodity may be appalling to you, but chances are it’s what your potential customers are looking for. So get out there and sell it to them!

WEEKLY TIP, TOOL, TRANQUILITY FINDER…

One of the best (and secure) document storage apps is Dropbox which syncs files quickly and easily. It is more accessible through the app (than for example iCloud), and generally more flexible for storing, managing, and syncing files. Also, if you need to upload changes to a Dropbox file you edited offline, this is possible.  Here’s how..

If you open a Microsoft Word document inside the Dropbox app, you can tap the “Edit” button in the bottom right corner. That will open the Microsoft Word app and allow you to edit the document. When you are finished editing, you tap the “Close” button in Word (the circle with an arrow in the upper left corner of the screen) and it will automatically upload the edited file back to Dropbox.

If you open a PDF file from Dropbox in an app like GoodReader and add some annotations, there is no automatic uploading function back to Dropbox (unless you’ve synced that folder). So you would have to manually upload that file back to Dropbox which can be done from inside the GoodReader app.

IN THE NEXT POST…

Thanks for taking the time to join me and hope you’ll join me next week when I’ll talk about how you can position yourself away from any competition by focusing on your personal attributes and showcasing these rather than worrying about the competition. I’ll show you 5 significant ways to stand out as a lawyer, so you can stand out from the herd.