Virtual Law Firms

The New Economy and the Virtual Law Firm of the Future

Introduction
Change in Structure of the Legal Profession
Time
Place and Space
Shifting Tasks to Low Cost Labor
Tangibility
Disintermediation: Unbundling Legal Services
Targeted Marketing
Examples of Law Firms With A Presence on the NET

Introduction

One would not use farm models to manage a factory economy, and one shouldn't use factory models to manage an information economy. One hallmark of the new economy is the need to define business in terms of customers' changing needs. Defining a law firm from the producers' —the lawyer's— point of view is simply no longer workable and will have vast implications for the practice of law and the structure of law firms. Information technology enables an organization to differentiate itself along several critical dimensions: 1) time; 2) space; 3) matter; 4) substitution of electronically-based information service for high-priced labor; 5) elimination of intermediaries through direct contact with the customer; and 6) customization of product or service to the particular needs of the single individual.

The rise of information technology within the legal profession will have unanticipated consequences as the technology shifts from being the servant of our wishes to master of our destiny. The technology may soon escape lawyer’s control, change their routines, challenge the inefficiencies they enjoy as well as create opportunities for new forms of law firms and law practice.

Change in Industry Structure;

There is ample evidence that the legal industry is ripe for change and restructuring. According to Peter F. Drucker there are four early indicators that are near-certain warnings that a major industry is about to undergo major structural change:

The most reliable and the most easily spotted of these indicators is rapid growth of an industry.
The way it perceives and services it's market is likely to have become inappropriate.
The convergence of technologies that were previously seen as distinctly separate.
An industry is ripe for basic structural change if the way in which it does business is changing rapidly.

All of these indicators are now present in the legal profession. Peter Drucker's perceptions about structural industry change are uncanny:

"Industry and market structures last for many, many years and seem completely stable....Actually, market and industry structures are quite brittle. One small scratch and they disintegrate, often fast. ...To continue to do business as before is almost a guarantee of disaster and might well condemn a company to extinction."

"Again and again when market or industry structure changes, the producers or suppliers who are today's industry leaders will be found neglecting the fastest-growing market segments. They will cling to practices that are rapidly becoming dysfunctional and obsolete."

During the past year, large law firms continued to contract, hiring of recent law school graduates continued to decline, and several major law firms throughout the country failed. These trends continue to accelerate. This precipitous action is a harbinger of the major contraction that the profession will soon undergo within its various sectors.

The emerging technology now makes possible the creation of a law firm which offers legal services that exploits the benefits of new information technology and uses those benefits to create an explicitly competitive strategy. In the new economy, enterprises that incorporate the benefits of advanced information technology will have a major competitive advantage of those that do not.

Time

Consumers need products and services any time (i.e. in their time frame, not the providers). Producers who deliver their products and services in real-time relative to their competitors, will have a decided advantage. Operating in real-time means no lag time between identification and fulfillment of the need.

Place and Distance

"Any product that is information based, whether in the form of sound, image, words, or data, can probably be adapted to any time, any place delivery. As Stanley Davis has accurately written:

"Managers should take another look at their markets and also define them in non-spatial, non-locational terms. The traditional market definitions will not disappear, they will be complemented by new ones.

Low Cost Labor Base

Stanley Davis has also written:

"By transferring their expertise onto software, onto the expert system, anyone who has the expert system is the expert. And these expert systems get linked up into local and long distance networks, the generalist can access them immediately. While in customers' homes or offices, for example, salespersons can access many specialized databases and related "expert" services in order to close on the sales during the calls. They will simply connect their portable microcomputers with built-in modems, via the telephone, to the expert provider. This is the any time, any place expert."

Tangibility

Increasingly the intangible component of products and services is increasing at the expense of the tangible component. What usually gives a product or service value, is its information content - its intangible aspect. The higher the knowledge content the more valuable the product is to the consumer or client.

Intangibility makes it difficult to locate the producer of the product or service in time or space. The increasingly important factory of the future is represented by the software factory. This is only partly because it is in the central field of the new economy, information processing. More important, it is "because it represents the research, design, development, engineering, manufacturing, distribution, marketing, sales, service, and administration of intangibles., the increasing economic value of no-matter." The factory of intangibles, is the more likely candidate for the organizational model of the future.

Intermediaries: Unbundling Legal Services

As our economy has become complex, the number of intermediaries in the chain between the consumer and the goods or services to be consumed has increased, each supposedly adding value by their contribution along the way. Disintermediation consists of any direct transaction or exchange of goods and services that bypasses a middleman, professional, specialist, or institution that is normally involved in such a transaction. The more intermediary a job or business is, the more vulnerable it is to disintermediation. The lawyer is the classic intermediary, acting as a broker, between the individual or corporation and our legal system. In every sector of our economy, disintermediation is creating major business opportunities by reducing the value-added chain to its most efficient number. Mail-order is one of the fastest growing sectors in retailing. Videocasette recorders are disintermediating television and movie theaters. HMO's are a disintermediating agent in health care. And do-it-yourself is disintermediating a host of fields.

Disintermediation is also having an impact on the professions. Vocationally, intermediation is synonymous with overspecialization. Disintermediary livelihoods can be described as activities that cut across the narrowness and over-specialization of law, medicine, and education. The paralegal profession is disintermediary because it provides the option of a less specialized professional which is appropriate to the problem to be solved. "There are times when you need a doctor and times when you go to the drugstore and get an aspirin...It is the same with lawyers." claims Arnold S. Goldstein, a Boston attorney with Meyers, Goldstein & Kosberg who has written several self-help law books.

Service economies are reacting and adjusting to having too many intermediaries. Every intermediation adds costs that are passed on to the consumer. Eliminating intermediation is one of the key ways to being the least-cost producer. The more intermediary a job or business is, the more vulnerable it is to disintermediation." The lawyer is the classic intermediary. Eliminate the lawyer in its traditional form and the cost of the legal product can be reduced dramatically. Because the lawyer cannot be eliminated from the legal transaction without major regulatory reform, which is unlikely, it becomes critical to design law firms where the lawyer's role is optimized without introducing diseconomies of scale.

Examples of Law Firms With A Presence on the Net

Aaron & Aaron, Barristers & Solicitors,Toronto, Ontario, Canada Adams and Reese Law Firm New Orleans, Baton Rouge, Houston, Mobile and D.C. (ALeRT) Allied Lawyers Response Team
The Alexander Law Firm Arent, Fox, Kintner, Plotkin, & Kahn Arthur S. Alexion Law Offices Law Offices of Lesley Ann Ash
Bailey, Harring and Peterson Barron & Stadfeld, P.C.
Law Office of Richard K. Berger
Law Offices of Mark Bernsley
Laura E. Blau
Law Offices of Bowie & Jensen Brobeck, Phleger & Harrison's Online Legal resources Timothy B. Broderick Browning and Company
The Law Firm of Buckley, Montgomery, Le Chevallier & Lindley P.C.
The Law Firm of Buschmann, Carr & Shanks P.C.
Canadian Immigration CaseLaw Update , Florida
Chown, Cairns Barristers and Solicitors ,St. Catharine's, Ontario, Canada Cohen Berke Law Firm - Miami
Collier & Associates Law Firm Colson, Hicks, Eidson, Colson, & Matthews, Miami, Florida Connell Foley & Geiser Web Site
Cooley Godward
Clifford Chance W. L. Clyatt Immigration Law Law Offices of Dennis Spencer Kahane San Ramon, California Divorce, Mediation, and California Family Law San Diego, California Eaton Law Firm Edge & Ellison U.K.
Elisha, Ekimoto & Harada Fenwick & West Fliesler, Dubb, Meyer & Lovejoy Foreman Law Firm
Fox Williams, London, UK Alan M. Gahtan
Law Offices of Robin Diane Goldstein Law office of Sheldon S. Goodman Hale and Dorr Information Center R. Mark Halligan, Esq. Harbottle & Lewis UK
Heller, Ehrman, White, & McAuliffe Hoskin, Graham & Brannelly Peter Huber Ice Miller Donadio & Ryan Immigration Law for the People International Lawyers Investors Arbitration Services Irell & Manella: Los Angeles, California
Christina L. Johnson Jonathan Taylor Legal Agency: New Zealand
Law Office of Kirsten Keith Kenneth P. Koury, Esq.: Los Angelese, California
Kramer Levin Jeff Kuester's Technology Law Resource Lackenbach Siegel Marzullo Aronson & Greenspan, P.C. Law Office of Robert J. Larson: Eugene, Oregon
Lester & Associates Charles D. Lienaux Ralph C. Losey - Attorney at Law Macdonald Rudder: Perth, Western Australia
Roger H. Madon, P.C. Deepak Malhotra: Spokane, Washington
Law Offices of Daniel H. Malvin McCarthy Tetrault, Canada's National Law Firm: Canada
The Law Offices of Murry A. Marks, J.D. McBride Baker & Coles: Chicago, Illinois
Meyer, Fluegge & Tenney, P.S. Meyer, Hendricks, Victor, Osborn & Maledon
Jerome P. Mullins Munsch Hardt Kopf Harr & Dinan, P.C.: Dallas, Texas
Sheela Murthy James Nelson Nexsen Pruet Jacobs & Pollard, LLP: South and North Carolina: Columbia, Charleston, Greenville, Charlotte
Oppedahl & Larson Patent Law Server James Ostrowski, Attorney at Law: Buffalo, New York
Pepper & Corazzini
Law Offices of A. Peter Rausch, Jr.: Stockton and San Francisco, California.
Reinhart, Boerner, Van Deuren, Norris, & Rieselbach, s.c. Reynolds, Mirth, Richards & Farmer: Edmonton, Alberta, Canada
Roderick, Myers and Linton: Ohio
Russell McVeagh McKenzie Barleet & Co.: New Zealand
Sabo & Zahn: Chicago, Illinois
Saul, Ewing, Remick and Saul: Philadelphia, Harrisburg and Malvern, PA, Wilmington, DE, Trenton, NJ and New York, NY
Law Offices of C. Matthew Schulz Shepstone & Wylie Peter Sim Siskind The Skornia Law Firm Small, Craig & Werkenthin, P.C. Smith Debnam Hibbert & Pahl Sokol & Timmons, P.A. Squires & Lopez Sullivan Ave & Holston: Dallas, Texas
Thierman Law Group Tilly & Ward Thomson & Thomson Venable, Baetjer, Howard & Civiletti: Washington/Baltimore
Venture Law Group: Menlo Park, California
John P. Weil & Co. Wells, St. John, Roberts, Gregory & Matkin, P.S. Wilson, Sonsini, Goodrich & Rosati Womble Carlyle Sandridge & Rice, Attorneys at Law Wyche, Burgess, Freeman & Parham, P.A.: Greenville, SC