Will disruption come to the legal industry? Hint: Oh, yes!

Written by on May 17, 2017 in Guest Blog with 0 Comments

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Did you know that nearly half of all UK business leaders think their business model will cease to exist within the next five years? In this article we take an in-depth insight into what that means for legal advisors to those organisations.

If you believe that your business will be unaffected, you are more than likely to be wrong. It is true that the law does not change quickly, but if your customer’s businesses change significantly, it is very likely that their needs and expectations of their legal advisors will change. This is an opportunity as well as a challenge for those practicing law.

“I would certainly think [AI] would result in significantly less employment in certain areas,” Warren Buffett said recently. “It would be a good thing that would require enormous transformation in how people relate to each other, what they expect of government, all kinds of things.”

Accelerating Pace of Change

I would like to help you to understand why this is happening, how quickly it will happen, and also what to do about it.

Just over two years ago I realised the speed of change was increasing and that few companies were prepared for the massive and rapid change that is happening right now. I call this disruption. It sounds negative, and in fact, it can be to those being disrupted. However, it also gives lots of opportunities for those willing and able to grab them.

Setting aside the why and the how of disruption for a moment, the interesting point about the whom is that just about anyone can be disruptive in the current environment. In the past, there were great inhibitors to disruption and the principle one was access to resources. Nowadays the main resources are digital and so are really cheap and getting more so.

The real battlefield is going to be in creating value for clients. Of course, we all create value for our clients. If someone else creates more value than we do clients have a tendency to, relationship notwithstanding, move away over time.

There are lots of markets where the relationship with the client is not that wonderful, and the clients or customers are very fickle. Take finance for example. The general feeling is that what keeps clients with their bank, their insurer and their pension provider is the inertia, the cost and the regulations that make changing unattractive. That coupled with the fact that the value is perceived to be about equal.

That is what is going to change. It is about to become really easy to change supplier, and the value that new business models will provide will be very attractive to your clients’ customers.

What happens when an industry or a company gets disrupted?

Disastrous decline. And it will be quick. The switch to a competitor is typically brutal. Once a product or service demonstrates enough differentiated value the decline for those being disrupted is measured in quarters not years. I worked with a company that was seeing its turnover declining at 15% a quarter. At that speed, there is little you can do to recover.


For instance, I expect that the lawyers who have JP Morgan as a client are probably smarting since the announcement in February of this year that they will be getting 360,000 hours less work from them.

JPMorgan Software Does in Seconds What Took Lawyers 360,000 Hours

I know Dana Deasy from when he was CIO at BP and it does not surprise me. What I find interesting is that it is not a Law firm that has disrupted the document review business but someone from a completely different industry that just saw an opportunity and made it happen. That is a common thread – your disruptor will probably be someone you were not expecting.

Are companies really going to be disrupted, or is that just hype?

There are some companies and industries that will be at the forefront of change because their products suit the technology that is just becoming available and easily replaces, brings down the cost or adds more value to what they do. Think of examples of industries that have completely or almost completely disappeared:

  • Phone box manufacturers
  • The TV listings magazines
  • Local butchers, Local clothes shops (actually almost all local shops that are not convenience based)
  • Post offices
  • Bank branches

… and Translators. You may well remember translation services that had very highly skilled people paid quite a lot to accurately turn one language into another? Well I would not wish to be offering translation as a service any more. Facebook has revealed a new method of carrying out machine translation using convolutional neural networks (CNNs) that, it says, “achieves state-of-the-art accuracy at nine times the speed of recurrent neural systems”.

And they have made it free to use: “Source code and the trained systems are available under an open source license on GitHub so that other researchers can build custom models for translation, text summarization, and other tasks.”

I doubt there will be many viable human translation services left in a year from now. And of course, the software is free. All anyone has to do is figure out how to build a business model over it.

Why now?

Simply put a trifecta of:

  1. new technology hitting maturity and viable price point;
  2. regulators being happy to support and even encourage change;
  3. clients, customers and consumers being willing to try new things.

This is not new there has always been change. What is new is the scale of the change and the speed. We have truly radical technology available today that could not have existed two years ago. You can go out and harness it for £450 pounds a month. If you have an idea of what you want to do with the technology, you can hire someone to do it for you and roll it out to millions of people without needing to own very much at all.

So, does this mean that there will be fewer or more customers for my firm?

Most probably fewer – elements of your work and your clients’ work will be broken off and centralised by someone else. Take for instance the example of contesting parking fines. The website donotpay.com invented by 18-year-old sixth former Joshua Bowder, automatically generates parking appeal letter templates using previously successful letters. It has overturned more that 160,000 parking fines and is now moving to give free legal aid in other areas.

So, you may not lose your clients completely, but their business will change. If you, or your, clients can’t find enough value in their new share of the market, or move into new value areas, they will shrink or perish.

What do I need to understand to make business decisions?

You need to understand how the trifecta is going to affect your clients. You need to understand which clients are going to thrive and which are not. You also can use this as an opportunity to develop new value for them, as they change, if you have insight into why and how you can be there to meet them with new services or products.

Does this mean I need to think about how I structure my business or what I do?

Yes. Lots of your customers are already doing that. Lots of legal companies are already doing that. This is a situation where if you do only what you do today in five years’ time your business is unlikely to be viable.

Can you do anything now? Yes, you can. Research shows that making investments in your future before the decline is not only easier but also much less wasteful and more likely to be successful.

Will disruption come to the legal industry?

Undoubtedly. Your clients may well still need legal help but

  1. There will be fewer of them, and you may not have relationships with the ones that survive
  2. They may well want different services from the ones they buy from you now.

If you have any doubt take a look at some of the startups who are approaching quickly: easy to see examples are LEXOO who are helping customers leave you (Trust Pilot score of 9.8). About 114,000 legal jobs are likely to be automated in the next 20 years, a 2016 study by Deloitte predicted. Technology has contributed to the loss of about 31,000 sector jobs. The report predicted another 39 per cent of jobs were at “high risk” of being made redundant in the next two decades.

Can I prepare for disruption or is it best to wait and see what happens?

You can – you can work out which of your customers are most likely to survive. How the survivors will most likely change and what new services or products they will need. Then you can work out how to provide them. If an 18 year old can create a disruptive offering so can you.

You need to invest in exploration. You need to look beyond investing in your website, in working on perfecting your customer experience. This is not a time for incremental improvements. You need to make some investment in exploration.


What do I need to know to make a difference?

You need to understand what is driving disruption for your customers. You need to explore how you can offer new customers more value in a world where they have to do new things and are indeed fighting for survival. You have to learn about the technology that is enabling new ways of doing business because, if you do, you have a shot at being the one – and in this new world there is only so much room for those who will create those niches and survive.

We are moving into a different business world. Amazingly the hurdles are down, and you have as much chance of making a massive difference as most other firms since size, influence and how much money you have in the bank is less important that agility and innovation. But there is not a lot of time left in which you can make a difference.

Find out how and what you can do now

I spent the last decade helping companies of different sizes to understand technology and how to use it for business advantage. I have advised legal firms including Linklaters and Clifford Chance, as well as large corporates such as Visa, PepsiCo, Barclays, Volvo, Rio Tinto, Balfour Beatty, Telefonica and many more.

At PathFinder4 we are dedicated to bringing together the connections and knowledge that leaders need to face the disruptive world head on. For immediate action, attend one of our public workshops, or arrange a private workshop to help you navigate and capitalise on the changing world.


Or for more decisive action, talk to us about joining the Pathfinder4 ecosystem where you will be in the centre of a movement for disruptive innovation, a place where you can meet the experts, suppliers and influencers that make things happen.  Unlike many other networks, we don’t just talk, we listen, bring insight and then facilitate the relationships that help disruptive leaders to take action to solve the specific challenges that the accelerating pace of technology brings.

This article was first published on Pathfinder4.

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About the Author

About the Author: Marc is a specialist in disruptive innovation and carries out research on how technology trends are changing the world. Marc is the Founder of PathFinder4 and Manage Disruption Limited and previously spent nine years as the EMEA Principal Advisor to C-level executives for Forrester Research. .


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