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  • Writer's pictureJaap Bosman

We will need a new breed of lawyers

Updated: Apr 11, 2019

During the process of writing my new book ‘value’ has been one of the center points. Clients are always looking for better value. In-house departments are trying to deliver value to the companies that employ them, and lawyers are under increasing pressure to deliver value to their clients. After a lot of thinking and doing extensive research we have eventually developed the TGO Value Matrix© I have written about this in one of my previous blogs [click here]. The matrix will indicate what price point will reflect a good value proposition. What it does not show is what the substance is that creates the value.

During the handling of a matter, lawyers spend time. This process starts on day one and lasts until the matter is finished. This process can be divided in many small steps in which at any time one or more lawyers are involved. Involvement will depend on required expertise and experience levels needed to complete a certain step. During the whole process all time-keepers are keeping track of the time they spend. Typically, in multiples of 6-minute increments. Total time is then multiplied by the going rates and we have a price to charge to the client.

Not all hours are created equal.

The fact that every increment carries the same price suggests that every time unit has the same value to the client. The problem is that this is not the case. Not all hours are created equal from the client’s perspective. A partner will charge the same hourly rate for outlining the strategy as for reviewing documents or taking part in a status-update conference call. Yet, from the perspective of the client outlining the strategy will have much more value than the time spent listening in on a lengthy conference call.

In order to better understand which steps of the process create the most added value, we need to distinguish between ‘creation’ and ‘production’. Creation is what is the product of the unique skills, brainpower, experience and expertise of the lawyer. To think up a brilliant strategy may take only a moment of enlightenment, but it can make or break a matter and has great value to the client. If charged by the hour this value would not be reflected in the price. I know a lawyer who was called by a client, a listed company, when a big credit had been revoked by the bank, just one week prior to a quarterly investors call. Not a good situation for a company to be in. This lawyer managed to solve the issue and have the credit reinstalled in time for the call. So, what is the value, two days of work? No, to the client this was worth 150.000 euro and the lawyers charged accordingly. Happy client, happy lawyer.

Besides creation, there is production. Production is everything that is needed to make things work. Production is execution. It is for instance the production of all documents needed. Since these documents are all created within the framework set in the creation part of the process, these have as such very little added value to the client. The problem, again, is that lawyers are charging the same hourly rates, regardless whether it is creation or production. Regardless the added value to the client.

I recently had a conversation with one of the real estate transaction superstars in a certain jurisdiction. This lawyer on his own generated over 10 million in revenue. I asked him if he felt, that under his leadership and direction the end result would be the same if he had to work with an experienced team of associates from a mid-tier firm that also does real estate transactions but charges 50% lower rates. He confirmed that the result would likely be the same. The value is in his experience, market knowledge, negotiating skills and strategic brilliance. The team is only needed to produce and process the documents.

The pressure on lawyers will increase to lower the cost of production. This is an area where technology certainly can help. Already today there are many IT solutions that can significantly lower the time spent on production. In the future there will be even more technology that can be employed to do all steps of the production as efficiently and cost effectively as possible. People will soon become too expensive and too inefficient to play a major role when it comes to the production elements of the matter.

It is clear that this split between creation and production will have a severe impact on today’s time-based business models of law firms. Today clients are paying very little for the most valuable part of the process: creation. And clients are paying too much for that labor-intensive part: production. One could argue that today on average the client pays the right price. Even if this were the case it will no longer be true if the time spent on production is reduced and reduced until machines are capable of doing most of the production work. Lawyers will need a new business model that is based on value-based billing and in which the time-spent is no longer leading. I am convinced that this is the direction in which the industry will be moving. In 5 to 10 years’ time there is no money to be made producing stuff. The value will be in the ability to create and to come up with smart legal solutions, smart strategies and creative thinking that will determine on a conceptual level what direction to take.

To deliver value through creation we need lawyers with different skills.

Once the industry, both clients and law firms, starts to realize that the value is in creation and once -that will be pretty soon- technology will be able to handle most of the production, the role of lawyers will be significantly different from today. Today law firms have substantial leverage and have based their business on a small army of associates who are performing boring tasks at substantial hourly rates. These lawyers today do not need more than to be diligent, precise and have a good knowledge of the law and legal procedures. No rocket science, just do what needs to be done. Producing and processing document after document. This is exactly what lawyers are trained by universities to do.

Once when in the near future creation will become the core of the value added by lawyers and law firms, we will need a different kind of lawyers. There will be less and less need for old fashioned lawyers. The monopoly on legal knowledge has been lost and the production work will have little or no value. In order to survive lawyers will need to be smart, street wise, business savvy, creative, pragmatic, solution oriented, have excellent people skills, and so on. We are no longer looking for diligent students with above average academic grades. The legal industry will need lawyers with an entirely new set of skills. None of these skills are currently taught at universities and law colleges. To remain in business and meet the clients’ demand for better value, lawyers will need to focus on human skills. For me this paints a picture of an inspiring future in which being a lawyer will be more ‘fun’ than ever before in the last decades. Finding the right talent and training and educating today’s lawyers will take time. Who wants to be successful tomorrow has little time to waste!


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