by Dan Pinnington

crystal ball

Currently there is a lot of discussion about changes in the practice of law and the future of the legal profession. When you are in the midst of changing times, it can sometimes be hard to see the changes that are occurring, much less understand where things are going. For some perspective, it can help to look at the before and after.

Looking back
Looking back, it would appear that the latter part of the 20th century was the golden era of the traditional law firm. Aside from a few big but temporary bumps, the economy grew steadily for several decades. Lawyers were the only game in town for legal advice and services as they were the only ones with access to the required knowledge and tools. In almost all areas of law and for firms of every size and type, from the biggest firms on Bay Street to the smaller firms and sole practitioners in smaller and rural communities, this created a steady supply of new clients and a growing demand for the services which only lawyers could provide.

Leveraging the billable hour (which increased year after year with few, if any, complaints from clients) and large numbers of hard-working articling students and associates, most firms were profitable and being a lawyer meant you were reasonably or very well off financially. In general, life was very good for lawyers and law firms.

The present
But as we start the second decade of the 21st century, this idyllic existence seems to be coming to an abrupt end. By many measures, the legal system is not functioning as it should. It has become very complex. Going to court is incredibly time consuming and expensive.

Self-represented parties are struggling to handle their own matters and are described as bogging down the court system. There is a large legal services gap, even for the middle class. Many people are unable to afford or access the legal services they need. Some are going outside the judicial system for dispute resolution.

There is also a shrinking demand for traditional legal services. Clients (and in particular, corporate clients) are paying a lot closer attention to their legal costs. They have come to recognize that the billable hour rewards the wrong behaviour and does nothing to encourage greater efficiency. Clients want greater predictability and value for their legal spends. They are doing cost/benefit and risk analyses, undertaking RFPs and are demanding more affordable legal services and alternative fee arrangements (e.g., flat or fixed fees, blended rates, phased fees, fees with a collar1, value fees, etc.). Many corporate clients are doing more work in-house. These things are creating pricing pressures and are decreasing the profitability of law firms. Reduced demand for traditional legal services (typically billed by the hour) also means there is less demand for articling students and a tendency towards over-supply of lawyers (while paradoxically at the same time, many rural and smaller communities don’t have enough lawyers). Competition between law firms is increasing for both getting clients and keeping good lawyers.

For a variety of reasons there is also a breakdown in traditional law firm structures. With fewer articling students and associates, firms are becoming top-heavy and the pyramid model is no longer working financially or for work-flow structures as demanded by corporate clients, who often do not want to pay for multiple lawyers on a file and certainly do not want to pay to train associates. When you consider outsourcing, some are suggesting firms will move to the “starfish” model, with few permanent lawyers and staff, but a range of outsourced suppliers, independent contractors and temporary employees who come and go as the work demands. Some firms are experiencing succession planning issues as fewer lawyers are moving up the ranks and willing to take on equity partner and leadership roles.

Changes on the horizon
The picture looking forward from the present doesn’t look much better – we certainly aren’t going to go back to the idyllic era of your parents’ lawyer. Needless to say, many of the issues and changes mentioned in the previous section will drive change. But there are other major drivers of change that are starting to have some impact now and will become more significant in coming years. They include:

  • Globalization: Both corporate and individual clients (who might themselves be from outside Ontario) are more likely to have matters involving non-Ontario law and parties.
  • Demographics: The profession is aging and there are large numbers of lawyers approaching retirement age. This is a significant issue in many smaller and rural communities because younger lawyers are not starting up new practices in these communities.
  • Technology: The internet and other technologies are having a disruptive impact, allowing many new ways for lawyers and clients to communicate and collaborate and opening the door for new types of legal service offerings.
  • Self-help and DIY tools: The internet has given individual or consumer clients access to virtually all the legal information and resources that only lawyers could access just a few decades ago.
  • Legal process outsourcing: Firms are exploring new ways to cut costs, including outsourcing legal work (e.g., research, document drafting and review, e-discovery, etc.) and non-legal work

With these changes will come some interesting questions and challenges regarding who should offer legal services and how they should be regulated. Tomorrow’s excerpt will discuss the question of “who will provide legal services?”

This article is from the September 2013 issue of LAWPRO Magazine, which can be read in full here.