How Vendors Not Lawyers Stifle Innovation in the Legal Profession

Recently, two prominent legal consultants, Pam Woldow and Kenneth Grady took lawyers to task for sitting on their hands, resolutely unyielding in the face of widespread innovation that could benefit clients. And while I’ll be the first to admit that many lawyers aren’t early adopters and suffer from serious lock step monster syndrome, we’re hardly the only force stifling change in the legal profession. What about legal vendors? Many have far more to lose than lawyers as technology changes – yet I’ve never seen any called out with same venom reserved for lawyers.

Here are four examples of how legal vendors have slowed the pace of innovation or blocked clients from benefiting from technology’s increased efficiencies and decreased costs.

Commercial Legal Research Vendors

With the rise of competition in the commercial legal research market, costs have declined and virtually any attorney can find an affordable, “all you can eat” subscription at a variety of price points. As a result, there’s a growing consensus that passing on the cost of legal research to clients is a bad business practice, as well as arguably unethical since today’s computerized tools replace the traditional law library, which is considered an overhead cost  that can’t be recovered as a direct charge from clients under ABA Ethics Op 93-379.

The non-recoverability of legal research costs poses a problem for premium services like Westlaw that come out on the higher end. After all, when lawyers rather than clients have to bear the cost of research out of pocket, some may opt for a cheaper service. So rather than figuring out ways to compete, comes now Westlaw, telling lawyers that clients would be better off if legal research costs were passed on to them directly, and suggesting that firms offer clients this option.  And Westlaw has also created a special curriculum for legal research courses taught in law school with a module on how to ensure that legal research costs are recovered from clients. Westlaw’s campaign helps entrench its existing incumbency while preventing clients from enjoying the cost reduction that technology and increased competition have brought to the commercial legal research market.

Court Reporters

Remember that successful trial by iPad that I wrote about a few weeks back? My ability to present professional photos and aerial maps (courtesy of Google maps) via my iPad projected on the courtroom monitors saved my clients at least $1500 in costs that would have been required if I’d have had to make multiple colored copies of photos for the jurors, and prepare of court-room sized exhibits.

Yet what technology giveth, vendors taketh away. And that $1500 that my clients saved has been completely cancelled out by the cost of the court transcript that we needed to order for post-trial proceedings. Despite the fact that the technology exists to transcribe court proceedings without any human intervention and at far lower cost, court reporters have enough of a lock on the system that even calls by a federal judge can’t dislodge their hold. The result? A surcharge of a couple of thousand dollars, passed on to clients, for any litigation that requires depositions or an appeal.

IT Consultants

An early adopter myself, I’ve been using cloud-based applications in my practice regularly for at least eight years. Meanwhile, companies like Rocket Matter, Clio and MyCase have been around for seven years but have only seen real traction and growth over the past three. True, lawyers account for part of the problem, as we’ve had to wait for state regulators (around 20 or so to date to weigh in with their own, nearly identical opinions (memo to bars: can you spell c-o-l-l-a-b-o-r-a-t-i-o-n?). But the other force that worked against the cloud were legal IT consultants, who earned good money setting up local systems and feared a loss of business from cloud services that could be installed without pricey professional support. By now, most tech consultants worth their salt have come around to the cloud — and realized that they can still deliver value by helping lawyers choose appropriate services or providing training to lawyers who still need added assistance.  But their initial negative views slowed more widespread adoption of the cloud in the legal industry by a couple of years.

Credit Card Vendors

For years, many lawyers wouldn’t accept credit cards — not because they are anti-technology and prefer cash or checks — but because trust accounting posed too much of a hassle. Yet in today’s economy where credit cards are pervasive, inability to accept payment by credit card can mean loss of business. Because credit cards are so common – and offer clients the type of protection intended by trust account requirements, I’ve proposed that we ditch the trust accounts  (except for settlement payments and escrow purposes) and simply let clients pay by credit card as they do for virtually every other transaction, and avail themselves of chargebacks or other remedies offered by the credit card as relief for unreasonable fees.

My proposal hasn’t gained much traction (though I did garner a round of applause for it at my last speaking event). After all, IOLTA trust accounts generate payments for legal services organizations (ironically off the backs of smaller clients), so that’s one incentive to keep them. But again, vendors are also at play – there are a number of companies that process credit cards for lawyers in an ethically compliant manner though they cost more than many conventional services. Many of these companies also advertise through bar associations, so they serve as a source of funds that bar associations don’t want to lose. But if you toss the trust accounts, the profitable supply chain that’s grown up around existing practices is lost as well.

Blaming lawyers for not innovating may feel good (I’ll admit, I vent on my colleagues myself) and score points with the cool crowd – but in the end it’s an overly simplistic approach that doesn’t account for all of the forces at play. And truth be told, the constant razzing makes even more open-minded lawyers like me defensive  –  and worse, suspicious that this whole future of law movement isn’t about clients at all, but really, about killing all the lawyers.