Thought leader

History shows us that services capable of being commoditised by means of IT will be commoditised.

When this happens prices will plummet and it will no longer be possible to compete as a business without similar levels of automation. In the banking business, this happened with automated teller machines (ATMs).

In the legal environment, it happened over 15 years ago with higher volume and more routine debt-collection work. The first computerised debt-collection systems were primitive but effective, and after a few years’ development it was, and is, no longer possible (by which I mean cost-effective) to undertake that kind of debt-collection work with people.

On the other hand, suitably equipped firms can still make a charge, albeit a small charge, for debt collection – but I am not so sure that this will remain the case for more common types of low-value, high-volume work. I believe that generic commoditised legal services will eventually, maybe shortly, be given away for free.

This is already happening in other business sectors. For instance, Wanadoo (the internet service provider, formerly known as Freeserve) showed that you could compete, and win, by offering ‘free’ internet access. The Encyclopaedia Britannica has decided that it can make more money out of ‘giving away’ the content of its encyclopaedia (its only product) on the web rather than by selling it.

Obviously, in this context, there is no such thing as a really ‘free’ service – the vendor or service provider must be confident (or willing to gamble) that they can generate income by subsidy, such as advertising, or by selling related or ‘follow-on’ services.

Internet users, even business users, are used to getting information and other services on the web for free, or on trial. More legal websites are offering free access to an increasing proportion of their value-added content – look at the websites of Butterworths and Sweet & Maxwell, for example

Law firms are not far behind. Many law firms’ websites provide electronic access to the brochures habitually given away in reception. Some have gone further and provided access – generally to clients – to selected portions of the firm’s know-how. Clients value this and appreciate it, but are probably not willing to pay for it. Nevertheless, it is worth doing in the interest of key client development, and ensuring that the client is psychologically and technologically tied-in to ‘their’ law firm.

If commoditised services are going to be given away, then where will law firm’s income come from? It will come from high-quality professional advertising or links to related providers for the smaller firms; for the larger firms it will come from selling the higher value-added follow-on services.

In the future only those giving away good quality ‘bread and butter’ services will be in a position to get the cream – and if it isn’t law firms, it will be other types of service organisations – accountants, publishers, the financial sector, estate agents, banks, or possibly even Microsoft.

Extract taken from the ‘Strategic IT Management for the Legal Profession’ report, written by Neil Cameron of the Neil Cameron Consulting Group, and published by Ark Group, February 2006. For more information, contact Adam Scrimshire at ascrimshire@ark-group.com