Peer to Peer Magazine

June 2010

The quarterly publication of the International Legal Technology Association

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Page 53 of 111

The Revolution Has Already Happened Which Brings Us to Law2020™ I have had the privilege of reading an early draft of John Alber’s article that precedes mine in this publication. Alber’s predictions are both less ambitious and more likely than those put forth by Susskind. Alber accurately describes demands from corporations and governments for better legal services, as well as better delivery models of legal services. My disagreement with Alber is more prosaic. Some of the “new initiatives” he describes are merely a reworking of long- established, or even historical, approaches to the practice of law and billing clients. AFAs: The New Old Thing There is great emphasis, both in his piece and in the legal community, on alternative fee arrangements (AFAs). Far from defining a new relationship between clients and law firms, AFAs return to a traditional approach to payment for legal services — formerly known as flat fee, fixed fee or a firm on retainer. It was only with the introduction of technology in the 1970s that law firms were able to provide a detailed breakdown of services rendered. Clients demanded it: “What am I being charged for? How much time did you spend doing this?” As recently as the 1980s, clients had firms on a retainer. Typically, corporations, through their in-house counsel, retained one or more firms to represent the corporation. The firm would handle whatever legal work arose, for a fixed annual fee. This approach was considered optimal for all concerned. Clients are now asking law firms to enter engagements on roughly the same terms. This is a welcome change for lawyers — it frees them from the yoke of the billable hour. It does nothing, though, to change the underlying law firm business model. Ultimately, AFAs transfer risk. Corporations, in the driver’s seat for a year or two, have attempted to shift the risk of the volume of legal work to their law firms. Law firms will agree to do this only so long as it is profitable. Clients have asked firms to take on more risk. The firms’ natural response will be to limit and define the risk. That becomes possible when legal services are again in demand — when competition returns to the marketplace. Clients will perceive that there are “better firms” (and not so good firms), and some will want to hire the best. Those firms will then be able to drop unprofitable AFAs and restore the profitable fee arrangements. Professions and the Myth of Disruptive Technologies Alber also notes that other industries (such as newspapers) have gone through massive change because of technology. This builds on a thought of Susskind’s, which is that the legal profession is an anachronism, a holdover of a medieval guild. My response is that argument misconceives both the business and the profession of law. Lawyers provide a bundle of services: advice, representation, drafting, legal research, problem-solving, negotiating. Inherent is the lawyer as professional. The legal profession may resemble a guild in some ways, but so, too, do other professions: doctors, dentists, accountants, engineers Peer to Peer the quarterly magazine of ILTA 55 LAW corp

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