Wednesday, May 06, 2009

Commodity vs. Premium Legal Advice

A Financial Times piece titled "Law Firms Adapt to a Stark New World" notes:

"Many clients feel that it will no longer be acceptable for law firms to demand premium fees for legal advice that is not contextualised or couched in commercial language."

Amen. A mix of antiquated state bar regulation and attorney information-hoarding has allowed lawyers to charge high rates for what is effectively just legal issue-spotting (e.g., "doing x exposes you to a, b and c legal risks.") However, technological advances, alternative practice models and offshoring are rapidly reducing the value that lawyers can extract from this kind of commoditized counseling.

I've got very low tolerance for counseling which simply spots issues and doesn't weigh them in light of their relative risks. I am increasingly unwilling to pay anything for such advice. Technology has made it easy for me to either directly spot the issues or cheaply hire someone to do it. Those who can't contextualize their advice to my business opportunities won't be hired again.

On the other hand, I am highly insensitive to price when it comes to premium legal advice. Attorneys who understand how my business works and can provide tailored advice that weighs risk against opportunity - particularly on big ticket items - are pure gold.

Unfortunately, a lot of attorneys don't have the pragmatism and confidence to provide premium counseling (ironically, you often see the worst offenders when dealing with low-grade business problems). So, along with self-help legal products and automated solutions, I expect we'll see a continued evolution in the corporate legal world to a bifurcated structure: A small number of lawyers will be able to demand premium pricing, while a much larger cohort will find their legal work significantly devalued.

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