Covid -> Downturn -> Client Pressure -> Innovation?

COVID-19 Response
#1

I’m very curious to see what impact the downturn will have on innovation. Clients under financial pressure often request/receive discounts because that’s all law firms know to offer. But IMO they should be offered new pricing models, new legal service delivery models, tech-enablement, etc., rather than simply, “how about 12% off?”

Anyone else have thoughts? Anyone else seeing any movement in that direction?

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#2

Hey @BradBlickstein, ditto to your insights. I really think it depends on the time horizon that firm leadership is operating under. If they are solely focused on cutting costs and maintaining revenue over the next 3-6 months, we can probably expect more pricing discounts. However, if firm leadership sees this as an opportunity to modernize their practice for the next 5-10 years, I think we will start seeing more firms quickly investing into process improvement and tech solutions to improve their service delivery.

My gut thinks that the firms that are operating on longer time horizons will ultimately be the ones to reap the rewards.

I had a conversation with a KM attorney at a AM Law 200 firm this week. From that conversation, they clearly understand the need to update their tech solutions but there still remains a leadership commitment/ financial investment hurdle to overcome. Obviously, its a data point of 1 but I wouldn’t be surprised if more firms are grappling with the same things.

The next few years are going to be a boon for people that have a record of successful tech adoption at large firms. They could quickly be in short supply.

#3

Super interesting topic and I agree with much of what you and Ryan note. I’d note my lens here is in-house counsel looking at direct legal tech adoption.

I’m seeing what I think is basically a two track process for legal technology:

  1. Anything that could reasonably be considered necessary infrastructure for working remotely has been accelerated. Big winners: collaboration tools, e-signatures/e-notary, research tools, things like that
  2. Most anything else is on pause as an instinctive reaction to the uncertainty.

I don’t think the things on pause will stay on pause forever. It may be harder to make a business case, but there’s going to be a rush to value over the next 12 months, and I’d guess that’s likely to drive adoption of a lot of new tools, assuming the providers can stay in business until then.

#4

Oh @BradBlickstein

Clients under financial pressure often request/receive discounts because that’s all law firms know to offer.

You misspelled “that’s all most clients know to ask for.” :wink:

Few things.

  • We are offering new pricing models, new service delivery models, and some tech enablement, as we have been doing regardless of CV-19.
  • Client uptake is uneven at best, because change takes more time and effort than staying the same. By and large, AFAs are more work and require more skill to negotiate and manage, not less. Generally speaking I don’t expect this to change in the sense that dispersion in client readiness/appetite will not disappear (bc diffusion theory).
  • I do expect uptick in client adoption but not right away. Most legal teams run pretty lean tbh. Post-2008 budget slashing a lot of legal organizations (on both buy and sell sides) do not have a ton of slack. That will make austerity tougher and the Great Recession playbook (across the board budget cuts / wholesale repricing simply by means of passing on in-house budget pressure into pricing pressure on the legacy providers) isn’t going to work again, so clients will have to actually restructure their legal supply chain (WHO does the work) and delivery models inclusive of process and tech enablement (HOW the work gets done). I think in time some of the savvier clients will also rethink the demand side too (WHAT work actually needs to get done + some sense of prioritization).

That said, all this will take time. It’s still early and most law depts. are completely inundated with tactical crisis response (operational stability / business continuity) and also a lot are facing down the barrel of serious liquidity issues and pretty severe budget pressure to trim costs and preserve cash. It is not a super time to be talking to them about starting new change management stuff.

I think once the dust settles from all of the shelter-in-place / real economy stoppage, it will still take time for all the budgetary implications to kick in as far as legal spend. But even then most clients will just be rebalancing current year dollars based on the CFO’s reforecast. Some clients will get to and past this quicker than others but I don’t think we will see meaningful market-wide movement toward adoption of new stuff for about a year.

For now I predict belt tightening will mostly hit paychecks and (yep) discounts. Somewhat relevant: https://news.bloomberglaw.com/corporate-governance/top-lawyers-pay-cut-as-coronavirus-brings-c-suite-austerity.

(Also what’s this 12% mess you’re talking? WHAT HAPPENED TO 10%?)

#5

@pxdelaney Patrick!
I totally get your “two track” take on legal tech innovation in reaction to the pandemic. Obviously Zoom and DocuSign are seeing huge surges in adoption. Not a lot of innovation here; both have been around forever.

Maybe it’s just as well that innovation will pause as an “instinctive reaction to the uncertainty,” because supporting such a tsunami of adoption will keep providers plenty busy in the short term. Ask Eric Yuan, CEO of Zoom, how busy he is. Both Zoom and DocuSign are hiring Customer Success Managers to assist clients with the challenges of increased adoption. Training helps.

But the heavy lifting will come post-COVID, when we need to keep the ground we’ve gained. Customer Success Managers for DocuSign will become climate activists in the fight against global warming. I imagine a world where no lawyer gets on a plane or in a car to sign a document ever again.