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Bar Journal - June 1, 2000

Testing Times for Lawyers

By:
 

It's an open secret that many New Hampshire lawyers are finding themselves working harder for less return. Certainly one factor behind this is the rapid growth in the number of lawyers practicing here. But is this the only factor? Is it even the major one?

Charles Robinson, a speaker at our mid-winter meeting, spoke about the future of the legal profession, and painted a pretty frightening picture. I found myself sharing at least some of his concern. After all, there is some handwriting on the wall already. The number of pro se litigants in virtually every part of the judicial system has grown to unprecedented levels. Lawyers who have traditionally relied on residential real estate work for part of their income have seen title companies virtually monopolize this field. Insurance defense counsel see their bills audited, billable rates limited, and their scope of discretion restricted by the carrier. Bank mergers have resulted in New Hampshire law firms losing out to regional and national firms.

What is going on here? Are these changes isolated and unrelated, or part of some more general phenomena? We lawyers tend to be a pretty insular lot. Could it be, as people like Mr. Robinson are suggesting, that forces outside the profession are affecting us?

I don't think there is any question about it. Observers of the business arena, to which (like it or not) we are at least connected, are uniformly stating that forces such as technology, the internet, the globalization of the economy, and demographic changes are causing changes in the business world at an unprecedented rate. One author notes:

The rate of change in the business world is not going to slow down anytime soon. If anything, competition in most industries is going to speed up over the next few decades. . . driven by globalization of the economy along with related technological and social trends.1

So, what are the changes going on out there in the business world? In a word, "lots." Between 1985 and 1995, 230 companies dropped out of the Fortune 500.2 What happened to them? Specifics are beyond the scope of this brief article, not to mention the author's knowledge. However, experts suggest a number of causes, many of which bear striking parallels to the changes we ourselves are seeing.

First, these experts note that while traditional competition has focused on holding onto or increasing market share, companies that have remained focused on this form of competition are the ones who are losing ground. Why? Because, say the experts, competition now is very different. For one thing, the successful companies are creating new markets such as VCRs, DVD players, personal computers, etc.3 Also, it's hard to compete for market share in "your" industry when industry boundaries themselves are blurring, such as those between commercial banking, investment banking, and brokerages.4

Another component of the changing marketplace is upward pressure from people of "lower" skills. Doctors who try to block RNs with technological training from using medical technology previously reserved to the profession will lose; RNs who try to stop upward pressure from LPNs will lose, and so on.5

Another force in the marketplace is called disintermediation, a term meaning elimination of the middle person.6 About 2 years ago, the CEO of a large insurance company stated that insurance is so complex that people will always need agents. Now, insurance companies are moving to sell their products directly through the internet in an effort to survive.7

It is not just competition in the marketplace that has changed; it's the marketplace itself. It is now consumer driven, rather than producer driven.8 This means that, more and more, consumers are deciding what goods and services are worth. If the producer fails to meet the consumers' price they will either go elsewhere for it, do it themselves, or simply do without.

But does all this really have anything to do with us? We are a profession, not a business. Shouldn't we be relatively immune to these forces of change? According to at least one author, the answer is a resounding "no." In fact, she describes the legal profession, along with doctors, academics and others as belonging to "lodge cultures."9 These groups tend to do things in certain ways "because that's the way it's always been done," look with a jaundiced eye on new ideas, and are likely to become defensive and even more introverted when threatened from the outside. Lodge cultures, notes this author, do not fare well in a rapidly changing environment. In fact, if there is a lowest circle of hell in today's marketplace, it is probably reserved for lodge cultures.

Is it really that bad? No one knows for certain, but there is at a minimum cause for deep concern. One recent and highly acclaimed book on competition in today's economy starts out with a test for rating a company's ability to "compete for the future." It poses 8 questions, and asks a company to rate itself along the scale (hint: you want to be on the right side of the scale). Modified somewhat to more closely frame questions we might ask about our profession, the test asks:

  1. How does the profession's vision stack up against that of its competitors?
    conventional and reactive . . . . . . . . . . . . . . . . distinctive and farsighted
  2. Which is generating more time?
    retooling the way it does things . . . . . . . . . . investing in strategies to compete in new ways
  3. How is the profession viewed as a competitor?
    dealing with rules made by others . . . . . . . . . . . .setting new rules of competition
  4. What is it better at?
    improving how it operates . .. . .. . . . . creating fundamentally new opportunities
  5. What percentage of its improvement efforts focus on:
    catching up with competitors . . . . . . . . . . . . . .building advantages new to the market
  6. To what extent is its transformation effort set by:
    competitor's actions . . . . . . . . . . . . . . . its own unique view of the future
  7. To what extent is it:
    engineering on the present . . . .. an architect designing the future
  8. Within the profession, what is the balance between:
    anxiety . . . . . . .. . . . . hope10

If this test does apply to us, we are in serious trouble. In many of these areas, we don't even make it on the scale (except, unfortunately, for number 8), let alone getting to the right side of it. Apart from some use of new technologies, most of us are essentially doing the same things in the same way we have always done them. Neither individually or collectively are we giving any thought to developing a strategy to "compete for the future." The problem is that, as a profession, we don't even seem to realize that there is a competition going on. But there is.

Over the past decade, CPAs have seen their tax preparation and auditing business dwindle, and they decided to do something about it. The result, after a great deal of work and the expenditure of some $20,000,000, can be viewed at a website, www.cpavision.org. The conclusion that they have reached is that they have to develop new markets, and to a very large degree, the business they are after is ours. The MDP (multi-disciplinary practice) that many of us hear about is but one element of this competition.

The competition doesn't stop there, either. A visit to the internet will produce all kinds of paralegal services, title companies, legal form producers, estate planning services, and arbitration and mediation services, many of whom involve few, if any, lawyers.

One seemingly obvious answer to this problem is to pass and enforce strong unauthorized practice of law (UPL) legislation. To the extent that a compelling case can be made that such legislation is necessary to protect the public, the legislature may respond. But if it turns out that consumers are going elsewhere out of choice - because they can get a similar product or service for less, and are willing to accept any accompanying risk of loss - it is doubtful, to say the least, that the legislature will leap to the defense of our profession. In short, if it is market forces that are driving change, legislation is not the answer.

What is the answer? We are. We need to realize the marketplace is changing and then put our talents to work at finding our place in it. We need to recognize that change is not the enemy; the enemy is our own failure to recognize and get out in front of it. In fact, times of change are times of great opportunity for those with vision and the willingness and determination to act on it.

The leadership of the New Hampshire Bar Association has decided that there can be no more relevant and important task for it than to try to be a focal point for this effort, and to try to answer some of the questions posed by change. How serious are the threats to our profession? How do we use the many new technological advances to more cheaply and efficiently serve our clients' needs? Who are our likely competitors, and what skills do we bring to the table that they lack? What new markets for our skills are likely to be opened up by the economic, demographic, and technological changes that are occurring? How do we position ourselves to take advantage of them?

These are among the issues we will be attempting to explore in the upcoming year. The issues are obviously complex, and we cannot and do not expect to resolve them on our own. So we will be drawing on the best resource we have - you. We will be calling on our membership, through our committees, sections, county and local bar associations, specialty bars - and anyone else who wants to put an oar in - to use its collective talents, experience and insights to help.

Will you join us?

ENDNOTES

1. Kotter, John P., Leading Change, p. 161, Harvard Business School Press, 1996.
2. James, Jane, Thinking in the Future Tense, p. 205, Simon & Schuster, 1996.
3. Hamel, Gary, and Prahalad, C.K., Competing for the Future, pp. 31, 43-45, Harvard Business School Press, 1994.
4. Id at p. 39.
5. James, supra, p. 163.
6. Robinson, Charles F., The 21st Century Law Practice, 1999.
7. Robinson, Charles F., Facing the Inevitability, Rapidity and Dynamics of Change, p. 11, 2000.
8. Robinson, The 21st Century Law Practice.
9. James, supra, pp. 135-38.
10. Hamel, supra, pp. 2-3.

The Author

Attorney Gregory D. Robbins is a director with the firm of Shaines & McEachern, Portsmouth, New Hampshire.

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