2016 is barely a quarter started and already some amazing trends are emerging. I recently read an article from Fast Company covering Pandora's plans to reinvent itself and challenge music streaming leaders such as Spotify and Apple Music.
One of the most important lessons Pandora learned as it saw Spotify gain market share is a common emerging theme. Businesses must be able to respond quickly to consumer demands but in a way that translates into revenue.
For the first time ever, in 2015 digital album sales were larger than physical album sales. In March of 2016, Kanye West's The Life of Pablo became the first album to reach number 1 on the Billboard music charts without selling any physical copies.
It would be an understatement to say that these are simply fads that will pass and are not trends to be expected in other industries. As the internet continues to invade and dominate all aspects of our lives, all consumers continue to expect responsive, clear, and packaged services.
One industry that continues to appear shock-resilient (not resistant, but merely resilient) to technology changes is the legal profession. There are innumerable reasons for this generalization, but the message for the future is clear: in order to keep pace with other professional services, productizing services can lead early movers to a clear competitive advantage.
From an outside perspective, the legal industry looks largely homogeneous. Firms may differentiate themselves in a number of niche areas, focus primarily between litigation or business services, or perhaps offer regional or even global presences. Buying power has largely been held by the firms. If we look at the consumer market of legal services, it would appear largely similar. One common theme that permeates this market is consumers lack of understanding concerning legal process, especially as it relates to the courts.
In a business environment such as this, firms would be wise to learn from mistakes made in other industries. Borrowing from the Pandora's lessons, the legal industry can prepare itself by embracing the following two lessons:
1. Embrace technology as a means of access new consumers and better servicing current consumers. Everyone today expects instant gratification. Websites are analyzed to the millisecond in responsiveness. The advent of email enabled lawyers to communicate better and respond more quickly to clients (even if some would say this isn't currently true and it took the legal industry awhile to accept this means of communication). Pandora learned the importance of responding quickly to consumer demands for custom artist selection as Spotify built a more successful business on custom playlists and individual selection. This, fueled by Spotify's app and website, enabled it to respond to customer demands more quickly.
What does this mean for the legal industry? Perhaps the best way of summarizing this point is for firms to embrace exploring alternate means of communication or even the delivery of a legal service. This transitions well into my second point, but experimentation into tech is something firms can (and should) take a proactive instead of reactive approach to.
2. The process of bundling and productizing services enables efficiency gains and builds consumer trust. By this I mean for firms to begin the process of analyzing what types of services it is delivering to its current clients on a consistent basis. The bundling of these services enables countless business gains such as performance tracking, resource allocation, and the creation of a marketable product.
This is a trend that is emerging in the legal industry, but one that should continue to gain traction. Many bemoan the billable hour as the only means of tracking not only performance, but also measuring value. If firms take a proactive approach and begin the self-analysis necessary to understand what work is performed and why, this can lead to efficiency understandings. Not less billable hours, but better resource allocation of valuable assets (lawyers). This productizing of routine work performed in high volumes builds trust with current and future consumers by providing transparency.
If you look to the future, it is doubtful to say that the billable hour will have completely vanished. It still remains an invaluable tool to track value. But perhaps the best place for it to remain is on highly custom and unique work. If anything can be said about technology, it does not displace all work or those performing it. Just work that is highly routine and rarely variable. This type of work is ripe for productizing and use as a commercial advantage enabled through technology.
While productizing your legal services may not lead to the chart-topping sales seen by The Life of Pablo or even Beyoncé's Lemonade, it can translate into a differentiation factor for the future of legal services.