Are law firms more like publishing businesses than they think, and what might that mean?

This sounds like an odd question, probably, if you're a lawyer and/or you run a law firm, but bear with me for a few hundred words more than we normally allow on the blogs. I'm conducting this gedankenexperiment because I've always thought that legal and publishing are ‘similar’ in that they can both, in large part, to my mind be described thus: transactional content production businesses based around information gathering and transformation. That means that they may face similar challenges (or ‘problems’ in old money) and may even be able to face up to those challenges having learned from each other’s approaches. I could be wrong, but it’s worth discussing, which our LinkedIn group has been doing.

James Dunning of management consultancy Geotrupes posted a discussion asking whether law firms might experience the same problems faced by media businesses as the internet burned through their revenue models. The responses were fascinating – mainly because, as usual, they showed how disparate the views are on this issue within the profession and its service industry.

‘Confusion over strategy; lack of focus on customer service; antiquated pricing systems, and lack of professional management – that sounds like the old newspaper industry to me. The next year should be very interesting,’ said Peter Blair of Mar-aon Consulting.

John Harman, director of multimedia at The College of Law, said: ‘Law firm discussions about the way forward with technology and internet etc is certainly reminiscent of the music industry circa 1999 – you have to change the framework, not just the picture in the frame. Ironically, social networking for instance is much more attuned to old school legal practice than many give credit to.’ I think that’s perceptive and accurate (the music industry has also faced very similar problems to the newspaper businesses and it is, of course, ‘media’), and it’s why we created the Gazette’s social media channels.

Marianne Barber, knowledge services deputy director at The College of Law, also backed that point: ‘It’s not about the technology but recognising that these tools can mimic face-to-face skills to create the necessary relationships, thus enabling a business to spread far wider than its traditional market [my emphasis]. This applies equally to law, I would have thought, as to any other client-based enterprise.’ I emphasise those words because to me diversification is key to building revenue for media businesses and may well be key to legal’s future too.

Stephen Kuncewicz, an IP, media & entertainment lawyer with Ralli in Manchester, was unequivocal: ‘This issue is one of if not the biggest facing our profession… [and] I can’t fail to see how the answer is anything but an unqualified "yes". Not only that, but "it’s happening already".

‘The unavoidable fact remains that the world, our playing field and our clients are changing around us at an exponential rate and we’re struggling to keep pace, let alone catch up. The profession faces a number or fundamental challenges which find a great many parallels in the media industries, with the most obvious being that our business model is out of date and becoming rapidly unfit for purpose.’

Business law specialist Spencer Laymond at Palmers Solicitors in London seems to agree. ‘If you stick your head in the stand, yes your bottom is probably going to get bitten. Those that don’t embrace change are at risk. But if you are complacent at anything, you are not going to survive and that’s no truer for the legal market than a universal principle of life.

‘Those firms that take the initiative and modernise their practice will be fine. I don’t believe there will be as much confusion and crisis as the hype [says], though. A fundamental key to the success of a firm is not the internet, but the client relationship and source of referral work.’

But of course the internet will change forever the choice of mode for the client relationship, and the way referrals function. Now, I’m not saying that the public will suddenly turn in droves to infomediaries like Moneysupermarket or their ilk for lawyers tomorrow. But I do think that the internet will push the creation of more technologies that allow law firms to do more than they have traditionally done, do what they do more cheaply, and diversify their revenue streams, and those firms that don’t do that will lose out.

This is exactly what the media businesses are trying to do. They used to be businesses filled with capable, expensive specialists, with two streams of revenue – advertising and sales. Sales have fallen off a cliff (and have been doing so for years) and advertising revenue, especially in recruitment, has been winging its way online for years.

This isn’t about making people pay for news content – not even Murdoch would say that's the way to make money from publishing, even if he is doing it. Right now, cash is coming from non-content sources. For example, British newspapers are selling white-labelled legal and all kinds of other ‘products’; they’re littered with ‘reader offers’ and suchlike, all passing some money to the business; certain newspapers make millions from online gambling. I’m obviously not saying law firms should do this. But something like this, perhaps, is inevitable.

To be clear, I’m saying that Susskind and many before him speaking to other sectors are likely right about commoditisation because they’re being proved right in media right now - in other words, it wasn't new - and it's down to this: what you always did that made money may not be your (primary) revenue stream of the future; but that doesn’t mean you can’t make money if you can see that you ‘own’ relationships, and use those to create new revenue streams.

So, how will you do that?