By Matthew Burgess, Director, View Legal
The submissions have been heard.
Judgment has been handed down - the incumbent law firm business model is broken.
The great lawyer bubble
While a myriad of reasons are provided, perhaps the most compelling is the fact that universities across the western world have become factories for producing professional service firm graduates, who specialise in the areas rewarded by time billing such as:
- long hours;
- rote learning;
- technology adverse; and
- engrained arrogance, particularly in relation to solutions that undermine the traditional personalised bespoke service offering (such as alternative business models, offshoring, outsourcing and automation).
Catalysts for change
Just as importantly, the owners of the incumbent firms must themselves create a demand for this style of graduate.
Another leading thinker, Clayton Christensen (in The Innovator's Dilemma), predicts that the prospect of the incumbent firms having the vision to truly cannibalise their existing business model is at best remote.
Maister still matters
Maister categorised the delivery of all professional services, including the law, into four broad categories, each of which has the prospect of being highly profitable.
The price is right
- unique services (or as Maister describes them ‘brain surgery’);
- experiential services (or as Maister describes them ‘physiotherapy’);
- brand name services (or as Maister describes them ‘nursing’); and
- commodity services (or as Maister describes them ‘chemist’).
Arguably, due to the internet, there are two further categories further down the value chain:
- wholesale; and
- online, with product produced only on demand.
Ultimately, the internet has increased the rate at which all technology disruption has historically taken place.
What the winners do
Winning firms understand that success ultimately depends on being:
- differentiated or unique;
- of demonstrable value; and
- delivered in a way that is difficult to replicate.
The disruptive business model requires funding, resource allocation and working environments that are significantly different from those of the traditional firm.
History doesn’t repeat; although it does rhyme
The key to a sustainable and successful business model is being self aware enough to know that unless they cannibalise their existing lines of revenue, competitors certainly will. Further, those competitors will have complete disregard for the ongoing profitability of the incumbent firms.
Primarily due to the embedded restraints of being a start up, innovative firms find ways to:
- monetise ideas quickly;
- minimise upfront cash expenses;
- understand that a product in market is always better than a delay to launch in order to ensure the quality is better - in other words, if you are not embarrassed by version 1 of the solution, you have launched too late;
- recycle and reuse what they have immediate access to; and
- understand that everything can look like a failure during the 'middle part'.
What will the changes look like?
To give some insight to what we believe a ‘firm of the future now' looks like, 10 examples from our business are listed below – five that we have abandoned and five that we have embraced.
Five things abandoned
- Timesheets – with timesheets, all we ever focused on was what was chargeable – without timesheets, we now focus on what is valuable.
- No leave policies – leave policies are a hangover from the industrial age – it is time to move on.
- No individual budgets – while we certainly have team goals, these are never broken down into individual monetary targets. Our targets are aligned around our performance in the eyes of customers. If we get those right, everything else flows (including money).
- No performance reviews – again, a very poor hangover from the industrial age.
- No diversity goals – seeking to mandate minimum percentages of certain genders, cultures, religious beliefs or sexuality disguise much bigger problems with the underlying business model.
Five features embraced
- Guaranteed fixed pricing – the definition of a competent service provider is someone who can devise a scope of work and provide an upfront fixed price that they are willing to refund in full if the customer is not satisfied with the performance.
- ROWE – if you do not know what this is, Google it or click here and join the movement.
- Solution choreographed teams – we work with whomever and on whatever terms are best to achieve the client’s objectives.
- AAR – again, if you do not know what it is, Google it or click here, and embed it into your business today.
- Diversity of thought – when two people in business are constantly of the same opinion, one is irrelevant. Raise diversity in every sense of the word and arbitrary politically correct percentages become irrelevant.
About our Guest Blogger
Having been a partner and lawyer of one of Australia’s leading independent law firms for over 17 years, View was established in mid 2014 and has from this time been actively disrupting the traditional law firm model.
Matthew regularly consults to other professional service providers on business model innovation, with his business book ‘The Dream Enabler’ a key foundation to this offering.