The greatest threat that lawyers are facing right now is evolution — and there are a lot of changes coming in the legal industry. We’re seeing it with non-lawyer firm ownership. It’s already expanding in Arizona, Utah, and other states.
There are going to be huge, huge market shifts. Whether that’s two years from today, five years from today, or 10 years from today…the reality of it is, there’s going to be outside money coming in — VC money that’s going to come into the legal industry — and when you’ve seen this happen in other industries, you see a consolidation of businesses.
If you are not running your practice like a business — if you’ve not built a brand, if you do not have predictable cash flow, all these different things — then 1) you’re not going to be very attractive for the VCs, but 2) those firms that are attractive are going to get significantly more resources. They’re going to be invested in, and what these companies do is invest to really scale things up and speed things up. In those firms, there’s going to be a lot of technology, efficiency, and modern advancements implemented.
To compete with those firms, it’s only going to be more important to run your practice like a business. You’ll need to have a great firm culture, really know your metrics, build a brand, and establish a really strong presence in your community.
If you do not do these things, the firms that are doing them are going to have a tremendous advantage, and it will become increasingly difficult to compete. Years into the future, firms that are just solos, or just lawyers, or have not differentiated themselves, will find it difficult if not impossible to exist.
The good news is there’s going to be a lot of opportunity in this, and I have great faith in the firms that are asking themselves:
- How do we start to run our practice like a business?
- How do we grow as leaders?
- How do we really get our operations dialed in? Our systems? Our processes?
- How do we really start to diversify our investments in the firm? The different types of cases that are coming in?
- How can we make sure that we have more predictable cash flow?
This is actually creating a ton of opportunity in the industry because it’s going to thin the herd.
In this type of situation, I would wake up terrified every single day, wondering how much time I really have to get my act together. Those that are ignoring this and saying, “This is light years away. Whatever. I don’t have to worry about it” — I really would reconsider that stance. Truthfully.
I’m not trying to give you a doomsday scenario, because you can leverage this as a great opportunity to grow. But if you ignore it, it’s like ignoring the internet, ignoring social media, and ignoring any change, thinking that everything will be fine.
We saw this years ago, where phonebook advertisers thought they had cracked the code. Or when great lawyers thought, “Who needs to advertise? That’s for those bad lawyers,” and they neglected marketing and advertising. Where do they find themselves today? Struggling to get new cases in the door.
This is no different — other than that I do think this will come at a much accelerated pace. And once the VC money starts coming in, you better watch out.