Future Shock: which law firms will survive?
25 June, 2013
In 1970 Alvin Toffler defined “too much change in too short a period of time” as future shock. Toffler’s description of societal change can be equally applied to how the business of practising law is changing. In 2013 we are witnessing future shock in law firms.
Unlike other professions, e.g. accountants and consulting engineers, that started to experience structural change decades ago, law firms are facing phenomenal change in a concentrated time period driven by globalisation and the ever-accelerating pace at which we live. It’s Future Shock 2 for lawyers: too much change in too short a period of time.
Toffler identified symptoms that included “shattering stress and disorientation” that led him to popularise the idea of “information overload”. The same is true today. Beaton Capital is advising many firms that find current market conditions disorientating. These firms find it tough prioritising options in a market that will not remain constant and where there are no precedents to guide decisions. New entrants with attractive value propositions are appearing all-too-frequently. And innovative substitute services are skimming away high margin work at price points with which incumbents cannot compete.
Cyclical or structural change in law firms?
The pace of change in law confuses the unprepared managing partner. Are they witnessing a mere cyclical event or is it structural? Most hope for the former and believe they can ride it out. But they are actually facing the latter – a structural shift in the market. Law is being delivered differently because clients say it should. In strategy language, ‘structural’ means permanent and progressive. And, here’s the rub. For incumbents, ‘structural almost always means adverse, whereas for new entrants and substitutes it means opportunity, usually temporarily for the former and long-term for the latter.
Headlines such as Thirty of the UK’s Top Law Firms in Trouble prove the point. Law firms that are not professionally managed as a well-run business are likely to perish. How many law firms are run with a business based governance structure, or are they more of an anarcho-syndicalist commune, how many research and develop a true business plan, or do they just dust-off last year’s budget and add CPI?
Too many firms that surfed the good and easy times are now starting to hit the rocks.
Thankfully there are firms that take the business of management and the management of business professionally – they will be the ones that survive law firm future shock.
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