Like France, many major law firms have failed to detect the paradigm shift and are therefore unprepared for it. But why? The reasons may have to do with various psychological biases:
- Sunk-cost fallacy: Organizations tend to stick to investments even if they cannot be recouped.
- Loss-aversion bias: People attach greater importance to a certain loss than to an uncertain win.
- Preference for completion: People have an aversion to leaving existing strategies unfinished.
- Pluralistic ignorance: The few who truly understand the situation are deterred from championing change for fear of alienating others.
- Personal identification with existing strategies: People feel that a change of course would harm reputations.
How might this apply specifically to law firms? Existing structures may be resistant to change and difficult to amend. Internal rules and procedures may generate perverse incentives to maintain the status quo in relation to hiring and promoting talented professionals, investing in research and development, and implementing strategies for business attraction and client retention.
Of course, a well-functioning market for legal services is essential for the correct functioning of the economy, so new players will step in to satisfy needs that are not adequately or sufficiently covered by law firms. These so-called “law companies” are growing very quickly indeed, thanks to new business models that combine better costumer value propositions with new profit formulas, more value-adding resources, and superior processes.2 With this approach, these companies cooperate with law firms—providing various services involving predictive analysis, automation of documents, cloud services, business-management software, etc.—while also competing against them in the market for legal services. Moreover, while law firms have been adjusting their business models, many corporations have been beefing up their legal departments so as to internalize more and more legal work, with a view to generating more value for the company.
The growing competitiveness of the legal services market has also increased competition for professionals who understand the paradigm shift and are capable of finding new business opportunities within it.
Lawyers must always seek to reconcile their clients’ interests with the interests of society as a whole.
What is a lawyer? The 7 key traits a lawyer must have today
The ideal lawyer has always been a trusted professional who uses a profound knowledge of people, the law, and organizations to provide advice and to represent clients in legal affairs, which can be delicate, complex, and sometimes deeply disturbing, both personally and professionally. In so doing, lawyers must always seek to reconcile their clients’ interests with the interests of society as a whole. These truths are eternal, but satisfying them in a specific place and time may require particular skills. In today’s highly competitive, fast-changing global and technological environment, I believe that lawyers must have seven key traits:
- A character molded in classic virtues such as prudence, fortitude, temperance, and justice.
- Profound knowledge of the law as it applies to complex, global, yet highly contextual tech-shaped situations.
- Deep appreciation for the nature and role of law in the (business) world and for its relation to other fields of human endeavor (usually encompassed under the term “humanities”).
- Good knowledge of technological solutions that improve lawyers’ key tasks.
- Familiarity with aspects of new and emerging business models that can better serve clients’ needs.
- An entrepreneurial spirit coupled with knowledge of techniques for innovating at scale.
- A constant desire to learn about the law in the wider context and a commitment to doing so in structured ways.
Being a successful lawyer has never been easy. Professionals who are smart, virtuous, hard-working, and committed to the law, their clients, and society will always be in high demand. To be a good lawyer, it has never been enough just to know the law, although the specific knowledge required may vary over time. Law schools can and must help lawyers adapt to the changing environment in order to help them succeed.
2 See Mark Cohen, “New Business Models—Not Technology—Will Transform the Legal Industry,” https://legalmosaic.com/blog/.
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