Riding the Technology Wave

The Technology Wave and the Solo Practitioner

Friday’s meeting introduced us to the brave new world of technology changing law firms as we know them. It was both fascinating and a little fear inducing. There certainly seems to be a wave of technological advances pushing out the “old law”. Corporate law is changing. Big law is changing. While it was interesting, the focus on corporate law left me wondering about solo practitioners and small law firms. Much of the software discussed at the meeting was not affordable nor tailored towards solo practitioners. How is technology affecting them? What technology is available to help to them?

I decided to do make a list of a few different programs available out there that might help solo practitioners or smaller firms. They are not all legal based, but then running a law firm is a business as much as it is a law practice.

  1. Accounting software

It’s important to stay on top of your accounting as a small business. You don’t want to be that person making a frantic run to your accountant with a shoe box full of receipts at the year end. Using Cloud-based software such as Toronto’s Wave, or Mint (now owned by intuit), it’s easy to update your records from your laptop, tablet or even your phone when you have some free time. Wave is geared towards companies with 9 or less employees, and it’s free to use. Mint supports all Canadian banks and is user-friendly.

  1. SEO (search engine optimization) software

You’ve made a sleek, modern, professional website for your firm! It cost a pretty penny (okay, a few hundred thousand now obsolete pennies) but it was worth it. Proudly you type your company name into Google. Nothing. You search frantically, page after page, but nope, Google doesn’t seem to know your beautiful website exists. That’s where SEO software comes in.

SEO is a massive industry. So don’t be afraid to hire someone to do this for you (which will also cost many obsolete pennies). However, if you are feeling brave (or cheap), here are some Cloud-based SEO products that may help: Moz.com can give you a simple action plan with steps to help you rank, position, and building your search rating on Google. SEMRush takes a different approach. They let you see what your competitors are spending adwords to help you stay in the top advertising spots.

  1. Clio

Yes, Clio has its own category. This product isn’t just for larger firms. They have packages as cheap as $39/month. Time tracking, billing, and lots of other goodies make Clio a useful product for almost any firm.

  1. Other niche software

There are lots of programs out there for specific legal areas. DivorceMate is a software product aimed at family law. It streamlines child support guidelines and spousal support guidelines, among other things. They have a Cloud-based version as well as a desktop version. You can choose to pay for a $500/subscription or $55 per file option. Do Process Software has several different specialized software for real estate, wills, estates, and others. The costs vary on the product you choose.

 

Hopefully this list helps you think of the different ways technology can help solo practitioners and small firms. The technology wave is coming for everyone, not just big law. We should all learn to ride and embrace the wave.

Transitions

Let me give you an image of me as a starting-out lawyer.  I’m on the phone with a client – a terrifying proposition in itself.  Client is talking about something incomprehensible (some Wall Street acronym or something) and assuming I not only know what it is but have an informed and expert opinion about the thing as it relates to the client.  I am googling this thing while on the phone, hoping the client can’t hear me typing.

Transitioning to law school to practice was like that.

One of the reasons L21C exists is that I wanted to try to fill what I think is a gap in legal education in preparing students for this transition, from law student to professional.  Law school does not provide students with much understanding of or information about the practicalities of practice, or about what the ecosystem of the legal services world is like.  It’s a big chasm indeed from pondering the significance of peppercorns to billing, spreadsheets, attempting to tame clients, navigating the internal politics and ego-bruises of working in multiple teams, and googling financial jargon as quietly as possible.

I often hear that it’s not an appropriate goal for law school to prepare students to be “practice-ready,” that there is no substitute for real-world experience and hands-on training.   As far as it goes, I think this is true, even just obvious.  It doesn’t follow, though, that law school can’t do more to prepare students for the transition to practice.  We can, and we should.

That’s the aspiration of L21C: to make students, if not “practice-ready,” at least a bit more ready for the challenges, surprises and mysteries of the coming transition to practice.  To demystify the mysteries, make at least some of the surprises less surprising, and, I hope, stir up some excitement about the challenges.

L21C is also transitioning this year.  Last year it was a completely brand-new course, still a prototype really, and I really was not sure what to expect.  This year is … well, honestly not that different, but it’s no longer completely brand new and I have a little bit more idea what to expect.  Last year’s class was a fantastic group who did some truly inspirational work.  Therefore, my expectations are very high.  I’m looking forward to equally great things from this year’s group, possibly even greater.  Go on, challenge yourselves!

The design of the course is substantially the same as it was last year, but there are some modifications.  The first few weeks are more structured, with fewer guest speakers and more lectures and activities that I planned.  In the later weeks we have many really amazing guest speakers, a panel, a field trip to Kamloops Innovation Centre, and plenty of time built in for teams to work on their LawHacks projects.  The idea is that in the first part of the semester students will get a solid understanding, from the lectures, readings and class activities, of the themes we are covering, and in the later part of the semester the group will be very well equipped to engage with the wonderful leaders and thinkers who are joining us as guests.

Of course I can’t end a post about transitions without mentioning the central focus of this course, the Big Transition: what’s happening to the profession itself.

Richard and Daniel Susskind, the authors of one of our course books (The Future of the Professions), say that the legal world “will change more radically over the next two decades than over the last two centuries” and the legal profession is “on the brink of unprecedented upheaval” (pp. 66-67, internal citations omitted).

Jordan Furlong, writing in the Canadian Bar Association Legal Futures Initiative publication Do Law Differently: Futures for Young Lawyers – another of our course texts – says “[a]lmost everything about career choices and employment options for new lawyers is in flux,” and that the generation of lawyers entering practice now “has both an obligation and an opportunity that its predecessors never experienced.”

David Scott, the co-chair of Borden Ladner Gervais, has said that the lack of access to justice for ordinary people is the legal profession’s equivalent of global warming.

These are the big, systemic transitions that we are going to learn, think and share ideas about in the course.  I hope that the discussion will carry on outside class – and will engage the wider community.  That’s what the blog is for, and I’m really excited to read posts and comments by our new class of L21C partners, as well as everyone else who wants to join the conversation.

This time of year people often say that September, not January is the real new year.  It’s a time of transitions.  Here we go!

Showcasing Student Writing Part II: Alternative Business Structures

Here is the second winner of the class votes for best memo – this time, on the very hot topic of alternative business structures for legal service providers.  Please note: this is not legal advice!

L21C LAW OFFICE

____________________________________________________

AKKORN                                                                                                            900 McGill Road

Kamloops, BC

V2C 0C8

File No. 00005

November 5, 2015

Gater & Slordon Inc.

999 Kangaroo Street

Sydney, NSW

1234

firm@gatorslordon.com

RE:      Ownership Structures for Legal Service Providers

 

Dear Sirs and Madams,

This memo is to advise about Gater & Slordon’s (“G&S”) expansion into the market in British Columbia (“BC”) with respect to the regulation of legal service providers, the potential for changes or reforms to the existing model, and the implications for your business model.

G&S’s current model is not permitted in BC and, to operate, G&S would need to alter their structure by either becoming a law firm (corporation or limited liability partnership) or a multi-disciplinary practice.

Forms of ownership structure currently permitted for legal service providers in BC

Like many other Canadian jurisdictions, BC approaches legal services under a traditional model; the ownership of law firms, whether partnerships or corporations, is restricted to lawyers.[1] Alternative business structures (“ABS”) are a new legal paradigm that allows non-lawyers to own law firms. Currently, every province in Canada prohibits ABS. In BC, these structures are barred under the Legal Profession Act as per ss. 81(4) and 82(1).[2] However, BC allows for multi-disciplinary practices (“MDP”), which are partnerships between legal practitioners and non-legal practitioners who provide legal services.[3] The Law Society of British Columbia (“LSBC”) allows MDPs under Rules 2-38 – 2-49. These structures allow for non-lawyer ownership but prohibit law firms from being publicly traded or to pursue business that does not provide legal services.[4] To become a MDP in BC there is an application process that specifies “the non-lawyer partner provides no services to the public except those that support or supplement the practice of law under the supervision of a lawyer”.[5] Although MDPs are permitted in BC, it appears very few have emerged.

Significant proposals to reform or liberalize business structures for legal service providers in BC

The LSBC commissioned a committee in 2011 to discuss the suitability of ABS in BC. The committee’s report made the following recommendations:[6]

  1. Outside ownership involvement in law firms should be allowed provided it is properly regulated and lawyers remain in control of the provision of legal services offered by the ABS. Further limits should be placed on outside ownership in accordance with the core values of the profession.
  2. The public sale of shares of law firms on the securities market should not be allowed as the risks associated outweigh the benefits.
  3. The stated benefits of ABS are “very” speculative and specific proposals should not be developed at this time.

Reform in Other Jurisdictions

The Australian province of New South Wales has permitted ABS since 2001.[7] Other Australian jurisdictions allow Incorporated Legal Practices (“ILP”). These enable lawyers to work in tandem with other professionals to provide services subject to adherence with certain standards; furthermore, non-lawyers can invest in ILPs and the businesses may sell shares on the Australian stock exchange[8]. The LSBC, in the 2011 committee report, mentions the Australian experience and notes that empirical data is not available to assess the benefits of ABS to the public.[9]

In addition, England and Wales permit ABS pursuant to the Legal Services Act 2007.[10] The rationale for allowing ABS is that it increases access to finance for service providers and that increased competition leads to innovation and price decreases for consumers. Like the Australian model, the new rules allow for non-lawyers to be in professional, managerial, or ownership roles.[11]

The American Bar Association (“ABA”) has expressed a much more conservative view on ABS. No US jurisdiction permits ABS except the District of Columbia.[12] The ABA is unadventurous on this issue; in 2011 the ABA voted to circulate a proposed rule change that would allow law firms to include non-lawyers in minority ownership roles.[13]

Likelihood of BC adopting ABS

The initial impression is that it is unlikely that BC will adopt ABS in the immediate future. Some challenges that need to be addressed are the issue of profit sharing and ethical obligations of lawyers to the public and justice system. However, if proper ethical and securities reporting mechanisms are enacted, an ABS model may become more realistic.

Earning a profit is not an adverse goal of the legal profession; however, it is something that detracts from the role of being an officer of the court. The ultimate duty to the client, the state, and the courts is enshrined in the Code of Professional Conduct under Chapter 2.1.[14] Access to justice is at the forefront of many legal discussions and allowing non-lawyers to profit may appear to take away from the justice system. In allowing the use of MDPs, it may be that the LSBC is testing whether or not the ABS is a viable option for BC.

It will be necessary for G&S to demonstrate that their entrance into the BC market will place an emphasis on legal service ahead of profits. This is a concern that the client may want to heed when determining the business model they wish to establish in BC. The conversation on ABS in BC has cooled down since 2011; therefore, there is room to push the conversation over the concern of profits versus the legal duty, which can be addressed by the use of a securities regulator for ABS.

Being required to report to a securities regulator, G&S will provide some form of accountability to the Regulator. [15] In turn, this can provide greater detail to both the LSBC and clients on the operation of the firm. This may bridge the gap between profitability and the legal duty to the client. Having public reports on its financial situation can allow greater scrutiny on the value for cost ratio that many clients view services through, forcing firms to ensure that their clients get the best value for their dollar. The self-reflection that some firms may go through when becoming publicly traded could encourage the re-evaluation of the service by focusing on the most efficient method of addressing the needs of the client.

Conclusion

The ABS experience in Australia appears to be a positive development.[16] It is possible that BC will adopt ABS, and possibly the rest of Canada, once legal regulators develop core principles that a self-regulating model can adhere to.

It is recommended that G&S alter their model to conform with current standards for BC if they wish to enter the market sooner rather than later. Transitioning to their Australian model once the LSBC approves the use of ABS will be easier if it is already established in the marketplace.

Moreover, G&S would benefit from maintaining their reporting habits from Australia.[17] This will demonstrate the willingness to maintain transparency and accountability to the LSBC and serve to further ease the transition to an ABS should the LSBC agree that an ABS could help fill the gap in the provision of legal services.

 

[1] Legal Profession Act, SBC 1998, c. 9, s. 81 (4); Legal Profession Act, SBC 1998, c. 9, s. 82.

[2] Ibid.

[3] Legal Services Commission, “What are ILPs/MDPs“, (11 November 2013) online: <https://www.lsc.qld.gov.au/compliance/incorporated-legal-practices/what-are-ilps-mdps>.

[4] Dave Bilinsky, “Multi-disciplinary practice” (23 September 2015), Practice Tips (bulletin), online:< https://www.lawsociety.bc.ca/page.cfm?cid=2111>.

[5] Ibid.

[6] Independence and Self-Governance Advisory Committee, Alternative Business Structures in the Legal Profession: Preliminary Discussions and Recommendations (Vancouver: The Law Society of British Columbia, 2011) at 22.

[7] Ibid at 5.

[8] Ibid at 10.

[9] Ibid.

[10] Ibid at 6.

[11] Ibid.

[12] American Bar Association, Issues Paper Concerning Alternative Business Structures at 3

http://www.americanbar.org/content/dam/aba/administrative/ethics_2020/abs_issues_paper.authcheckdam.pdf

[13] Ibid at 9.

[14] Law Society of British Columbia, Code of Professional Conduct for BC at 2.1.

[15] Loughrey, J., “Accountability and the Regulation of the Large Law Firm Lawyer”, (2014) 77 Modern Law Review 5, 732-762, at 749.

[16] What is interesting to note is that by 2011 the Law Council of Australia commented that state level legal services commissioners reported higher professional standards from alternative business models than firms still organized in the more traditional approach. See:

Alexander Ward, “Alternative Business Structures” (Address to Council of the Law Society of England and Wales delivered on 4 October 2011, http://www.lawcouncil.asn.au/lawcouncil/images/LCA-PDF/speeches/20111004LawSocietyofEnglandandWalesSpeech.pdf) at 4.

[17] See: Steve Mark & Molly Hutcherson, “New Structures for Legal Practices and the Challenges they bring for Regulators” (Paper delivered at the 14th Commonwealth Law Conference 2005, September 2005, http://www.olsc.nsw.gov.au/Documents/new_structures_legal_practice_challenges.pdf) at 7-8.

tradition

 

In Chapter 6 of Richard Susskind’s book “Tomorrow’s Lawyers”, he discusses the status quo of how law firms have operated historically, and just how risky these traditions may be in the current global economic and social markets.

In working for a medium sized full service law firm this past summer, I absolutely agree with the concerns surrounding the sustainability of the traditional model of law firm operations. Considering costs associated with the practice in addition to the “extras” which the large firms consider to be a part of the basic “necessities”, it is clear that the amount of money being generated and spent goes beyond what can reasonably be sustained in the current economy. These include corporate lunches, dinners and parties. Although my firm is a medium sized firm, the partnership was always keen on ensuring that the lawyers felt appreciated by hosting lunches, dinners, marketing and networking events in addition to an annual retreat.

It would be a lie to say that I was not happy to receive such generosity and appreciation by my superiors and colleagues, however, I have to be honest in admitting that these “extras” are not as “necessary”7427c23ab949b2e020dae43a6a58a053 as we’d like to think they are.

When I think about where the money comes from to provide such gifts to the lawyers at the firm, I always end up with one source; the clients. It seems problematic to use funds allocated and paid for legal services towards personal expenses in house. However, this has always been “the way”.

Susskind notes that “lawyers have for many years performed routine work for which they have been overqualified and for which, in turn, they have been overcharging”.

Does the above statement explain why the traditional model has become entrenched in firm culture? I would argue that the compensation received from clients for legal services must cover the special knowledge, understanding and reassurance that a lawyer provides their client. Namely, clients pay to have a lawyer deal with their matter in order for them to feel as relaxed as possible with their predicament. The specialized and privileged access to information granted to lawyers is also a chargeable service in my view. Considering the average law school education amounts to sixty or so thousand dollars excluding undergraduate or postgraduate studies, it seems understandable why young lawyers are eager to join a firm where they will have the potential to grow into a gainful practice that follows the traditional model.

Susskind is correct however in stating that “to survive and thrive I suspect most will need to [make] changes to enable the changes from their current approach to a new, sustainable, longer-term business model.”

Personally, I think the primary issue is that clients are able to access plenty of information online through a variety of platforms, including digital lawyer substitutes. These substitutes offer users an online, self-serve options in drafting routine documents such as leases, powers of attorney, etc. Other sites offer legal advice, etc.

If law firms perceived these substitute services as legitimate threats to their business then change would likely arise. However, law firms, specifically the large global firms, do not recognize the threat and therefor are not motivated to change. Maybe this is the root of the problem?

History tells us however, that giants can be defeated by the “little guy”.