But what is the long-term strategy for these new entrants? How are existing players responding to the challenges and the opportunities of legal services reform? To answer these questions, Epoq – the company behind DirectLaw and a significant market innovator – commissioned legal research firm Jures to conduct a series of interviews with both major consumer brands and law firms.

The results have now been published in a report entitled ‘Brave new worlds: new thinking in legal services’. ‘Brave new worlds’ shows that the market has rapidly transitioned, with new players devoting considerable time and resources to expanding into the market. A number of traditional legal services providers have responded by trying to reform and re-energise their models. Featured legal service providers include:

• Co-Operative Legal Services – with more stores than any other retailer in the UK (over 4,000), does the Co-Op plan to become the biggest high-street legal brands in the country?

• Irwin Mitchell – the national giant gearing up to become the first British law firm to float on the Stock Exchange.

• DAS Legal Expenses Insurance – an organisation which handles 50,000 claims a year through motor and household insurance policies sold by intermediaries and sees the LSA a ‘fantastic opportunity to open up legal services directly under a DAS banner to policyholders.’

• Russell Jones & Walker – the national law firm which delivered over 1,200 online wills to clients over a 12 month period through its ‘Your Legal Rights’ site; a service powered by Epoq’s technology.

• Royal Bank of Scotland (RBS) Mentor – a regulatory compliance service for 14,000 businesses and RiskRemedy, an online self-service employment law and health and safety compliance package also aimed at the SME market.

• Quality Solicitors – formed as the legal profession’s answer to the growing threat posed by banks and supermarkets as a result of the reforms of the Legal Services Act. Craig Holt, its Chief Executive, believes his company will eventually dominate the high street with a 30-40% market share.

• A4e – the Leading welfare-to-work business planning to offer both consumers and businesses a broad range of legal services at a “more affordable” cost than currently seen in the market

Epoq’s Executive Chairman, Richard Cohen comments: “The opening up of the legal services market – as controversial as many lawyers might find the process – marks a genuine opportunity for lawyers and their clients. As our report shows, a number of law firms and new entrants are now taking advantage of this opportunity and it’s important that the rest of the market responds, or it will be left behind.”

To order a copy of ‘Brave new worlds: new thinking in legal services’ simply drop an email to: info@epoq.co.uk

The panel asked a team of experts, including solicitors, to assess a sample of 101 Wills from a variety of different providers. These included Law Firms, Will writing companies and DIY services. A quarter of these Wills failed on the grounds of poor quality.

The report concluded:

Key problems in the shadow shopping where the will was not legally valid or did not meet the client‟s stated requirements, were; inadequate treatment of the client’s needs; the client’s requests not being met; potentially illegal actions; inconsistent or contradictory language; insufficient detail; and poor presentation.

Key problems in the case studies relating to poor advice included cutting and pasting of precedents; unnecessary complexity; and use of outdated terminology.

As might be expected given the varying quality of DIY legal options – from paper based forms to less sophisticated online options, to properly maintained document automation systems backed by legal review – three in ten self completion Wills failed the assessment. However, in a more troubling finding, a fifth of Wills produced by both Solicitors and Will Writing companies were also failed on the grounds of poor quality. Solicitors were more likely to fail on simple Wills whereas Will Writing companies were more likely to fail on the more complicated ones.

As highlighted by Rachel Rothwell in the Law Society Gazette the fact that just as many failed Wills were drawn up by solicitors as Will writers is a blow for the profession’s approach of emphasising quality over cost.

Despite this, among the report there were some positives and some important lessons for the profession. Though a 20% failure rate is highly troubling, the fact remains that a majority of Solicitor Wills passed the assessment and client satisfaction was the highest in the survey at 84%. The failures were concentrated around simple Wills which suggests part of the problem may be that the work involved was not worth the time and was passed to staff were not suitably qualified. This is a practice that can be eradicated with time saving technology and greater efficiency which can systemize routine drafting and allow more quality control. This can also go a long way to addressing another major issue highlighted by clients, that of cost.

Though Will Writers and Law Firms (based on this small sample) are at parity in terms of drafting quality, Will Writers are vastly ahead of Solicitors in another important area – cross selling. The panel’s research showed how will-writers cross-sold will storage, estate administration, powers of attorney and “legal assistance in future” far more actively than solicitors. Clearly firms need to do more of this – especially given that the research also showed clients would be more likely to buy the cross-sold services offered by solicitors.

The piece by Susskind is something of a call to action for the legal profession. He argues that it is time for ‘a second generation of legal services in the UK…..easier to use; not just text on screen but interactive and multimedia’. ‘Automated document production should be widely available’ and this should be accompanied by ‘communities – social networks where non-lawyers can share legal tips and experiences’. He presents as a possibility the idea that the profession could build ‘wiki-like resources’ for citizens on a pro bono basis in order to take up some of the slack from the decline in legal aid funding; a kind of NHS direct for law. The thrust of his argument is that it is ‘online legal services’ which is the real ‘game changer’ and that more can be done to assist non-lawyers to ‘cope with law and regulation’.

The title of the Times piece is somewhat misleading. In the U.K the ‘online legal desert’ has (if you will forgive the cliché) long been flowering with a host of innovative internet based solutions. Due to the initiatives pursued by both new entrants to the legal services market and more progressive law firms, the UK’s consumers now have access to an unprecedented range of options when it comes to purchasing and accessing legal services. As Susskind points out this is a fact not yet widely appreciated among the general public. However this is changing rapidly and awareness will only accelerate with the radical offerings embraced by such players as the Co-op and Quality Solicitors. The legal services market will inevitably become more dynamic and as providers continue to embrace technologies such as web enabled document drafting, social media, cloud computing and new forms of multimedia, the way consumers access legal services will come closer to Susskind’s vision.

Quality Solicitors & WHSmith

This morning the big news in Legal Futures and the Law Society Gazette was that national law firm network Quality Solicitors has agreed a deal with W H Smiths to place Legal Access Points (LAPs) in the retailer’s stores.

What does a LAP consist of? It appears to be a space reserved within the WH Smiths branch which will be staffed by a Quality Solicitors firm. The staff member attending the LAP can then sign up clients using an ipad app which allows them to book appointments, provide quotes, sell Wills and fixed fee advice sessions and also sign people up to a Quality Solicitors rewards scheme (thereby signing people up who don’t even have a legal issue yet).

According to the chief executive Craig Holt the week long pilot saw 1000 people take a card for the rewards scheme -  a figure suggesting that if Quality solicitors installed LAPs in 200 stores it would generate 100,000 leads per week (the full WH Smith network consists of over 1,000 stores). Other initiatives included in-store advertising and an enhanced television advertising campaign.

All this suggests very strongly that, in future, part of a  junior solicitor’s role will include face to face direct selling to consumers – not something I would have thought I was signing up for when I did my Graduate Diploma in Law five years ago; or as one outraged comment on the Gazette’s webste puts it ‘Genius! Let’s dumb down 6 years of legal training to selling ourselves in smith’s like the blokes selling mobile tariffs and electricity and gas’ (EDIT this article in the Solicitors Journal suggests it might be law students who are doing the in-store ‘selling’. Despite derisory comments like this, as we have consistently argued, the legal profession is goes to have to change radically to meet consumer demand – if it doesn’t then the innovation is going to come solely from new entrants into the market who understand and employ the same techniques of accessibility and visibility Quality Solicitors are using.  As it is Quality Solicitors has a fighting chance of bridging the gap between law firms and consumers and responding to the challenges of the post Legal Services Act legal landscape.

A Smarta way to deliver law

And the challenges continue to stack up.

Those who watch Dragons Den will undoubtedly be familiar with Theo Paphitis who along with Shaa Wasmund launched Smarta – a business support and advice network for small business owners and entrepreneurs. Now their team has launched Smarta Business Builder, an online service endorsed and supported by RBS and Natwest, which enables businesses to manage finances, build a website, create a business plan, manage emails, and last – but certainly not least – create legal documents using our document automation technology. This tie up between Smarta and the bank will be able to assist small business customers by aggregating essential services in one place at an affordable rate. Theo is quoted as saying ‘Accounts, website, email, business plan, legal documents, Smarta Business Builder takes care of everything, all in one place. I’m not just proud to recommend Smarta Business Builder, I’m suggesting that all small businesses use it too!’.

DAS plan to expand services

Meanwhile the Gazette is reporting that legal expenses insurer DAS is considering providing written legal advice to policyholders once it has become an ABS and acquired law firm ‘CW law’. This would expand the scope of the existing legal advice telephone service and assist in converting the approximately 125,000 calls that reach the advice line annually and which could be dealt with ‘in-house’ by CW Law. This shows how the new structure envisaged by the Legal Services Act are beginning to evolve and will result in changes in the flow of legal work.

Overall it appears that the legal services market continues to hot up. It will be interesting to see what happens as the year unfolds.

But does it really work?

In a recent study by independent research company ‘Consumer Knowledge Centre’ (CKC) we decided to put our system to the test by over 100 solicitors. CKC asked them to take client instructions and create a first draft of three legal documents – a comprehensive will for a married person, a detailed employment agreement and a lasting power of attorney (property and affairs). In the first attempt the solicitors would use the traditional method of bespoke drafting. In the second attempt the solicitors were asked to use our DirectLaw and Rapidocs LawDraft services to complete the documents. Rapidocs LawDraft provides in-house automated document drafting, while DirectLaw enables law firm clients to complete an online questionnaire to create a first draft for a lawyer to review and amend if necessary.

When the solicitors used document automation technology the time savings were substantial. Using the traditional method the Will took 80 minutes to produce, the employment agreement took 1 hour and 45 minutes and the lasting power of attorney took an hour and 18 minutes. With the automation of Rapidocs Lawdraft, the Will took just 25 minutes, the employment agreement, 25 minutes and the lasting power of attorney 28 minutes. Overall the solicitors spent an average of 86 minutes taking instructions and drafting the three documents yet with LawDraft this dropped to 26 minutes – an average time saving of 70%. With DirectLaw the results were even better. Here the client instructs the law firm by completing an online questionnaire. As the questions are answered the document is prepared using pre-programmed logic and a detailed draft is sent to the solicitor. This results in a 100% time saving as the client enters the data and automation takes care of the rest.

The research clearly shows that using Rapidocs LawDraft and DirectLaw can save law firms substantial amounts of time. The use of document automation and allied workflow systems can be employed to squeeze out cost and increase margin in the delivery of everyday legal services  ensuring that valuable trained lawyer time is kept to a minimum and only utilised in the process where required.

Richard has also written an article for Legal IT Professionals entitled ‘Technology as a strategic differentiator in today’s legal profession’ which shows how document automation technology is stepping to the forefront and changing the way lawyers work.

A significant finding for law firms is that 34% of respondents stated that they would be more likely to choose a firm which offered the convenience of online access and services. 22% disagreed and 37% neither agreed nor disagreed. This percentage is higher for those falling roughly within ‘Generation Y’. The survey found that 44% of 25-to-39 year-old males and 40% of women, along with 40% of 16-to-24 year-old males, would choose a law firm offering online access to documents over another law firm.

Our prediction – and it seems a pretty safe one to make – is that this proportion is likely to increase substantially as online delivery becomes more and more standard in the legal services market and other sectors. It should now be clear that clients are becoming more used to buying on and communicating via the internet and that all age groups are increasingly consuming all types of digital media. This has implications for the profession since many have yet to embrace the set of Internet technologies that have become standard in almost every other industry. There is a growing disconnect between the way people consume other services and the way they consume legal services – one new entrants will be looking to exploit.

At first glance this might not appear applicable to legal services, but work with me on this…..

What most firms do….

1. Prospective client A calls up and is willing to pay the hourly fees quoted, then the client is taken on.

2. Prospective client B calls up and is willing to pay a fixed fee, – in this case sometimes the client is taken on

3. Prospective client C calls up and is only able to pay a lower fixed fee. In this case the client is hardly ever taken on

As a result, the income for most law firms is only coming from clients in the ‘A’ category.

How do I know this? I am currently conducting a training programme for our DirectLaw service and I decided to phone a large number of firms; in the process representing myself as clients in the A, B and C categories. The aim of DirectLaw is to make clients in the B and C categories profitable for firms. My conclusion from my research was that firms are currently losing large swaths of potential business because they don’t believe they can support clients B and C profitably. Guess what, they can!

But how much money is being left on the table by not servicing these clients? When you think about it, it’s a lot, especially when you think about the client’s lifetime value. If you give a good service and get repeat business and recommendations from them it’s obvious that winning their business should be a priority.

How many clients have you turned away (or turned away from you) in the last month? If you don’t know, start counting it for the month of February – then think ‘wouldn’t it be great if there was a way to make these my clients too’.

THEY (emphasis intentional) are calling – the firm has the chance to win them as clients, and yet they let them go elsewhere because they are not listening and don’t think they can be supported. It’s a business travesty and it’s one of the core reasons why big brands have an interest in the legal services market in the first place – people are being underserved.

What smart firms are doing now

1. Servicing the ‘A clients’

2. Listening out for Clients B or C – Understanding their requirements and seeing things from their perspective. Some are saying things like “I can see the cost is an issue for you, let me find out a little more about your circumstances and see if there is something we can do…”. Then they are engaging them in the most efficient manner possible; meeting their price aspirations while keeping internal costs as low as possible.

Now back to Price Discrimination. The strategy for firms must be to sell services at the right price point for each client, varying the service level slightly to reflect the client’s needs and make it work by using the right technology, content and processes. It’s happening out there right now

Those who want to stop talking and start doing can get in contact. I wont turn you away!

Epoq and DirectLaw have been in the news recently as the legal profession looks forward to the challenges ahead in 2011.

In many others, especially in law firms, the same technology engenders a totally different reaction. “I can see the market is going more tech-savvy, but we aren’t ready for it just yet”, is one such reaction; “clients don’t want to engage online” another; to that add “it gives compliance issues”, “it is too big a change for us”, “we don’t have time to implement” or the plain “we just don’t need it”.

People have said to me that law firms aren’t like other businesses, but I beg to differ. People are in business to make a profit. Ideally they’d like to see revenue growing, but I am sure there is not a businessman out there that would say no to making the same revenue with less costs. Profit is what being in business is about.

What constantly surprises me is how resistant law firms are to new ways of working. If you look around in the world at large, in almost every sector technology is revolutionising delivery. Think cars – previously built by humans, now by robots. Music – previously a tangible commodity, now electronic. Many retailers sell more online than in their stores. People engage with their insurers, banks, stockbrokers and airlines by web. I am surprised why law firms think customers don’t want to engage online.

Consumers are simple animals. They want more for less. And technology has driven prices down in many industries. But not the law? Why is that?

Well firstly, it is not quite true. Look at conveyancing. Some very big players have used technology and efficient processes to drive down price, and look at what market share they got. But what about other legal services? Well, firms aren’t being forced to adopt technology. It is a sort of monopoly. Consumers want to purchase cheaper – and you’d be hard pushed to find a client that thinks lawyers represent good value for money – but they don’t have much choice.

But in October 2011 that will all change. There will be new players stepping into the market. They will have powerful brand names and big marketing budgets. You can be absolutely certain they will be looking to deliver services as cheaply as possible. And I would be very surprised if they don’t make maximum use of technology and processes to do that.

Technology is bringing unheralded change. It is simply frightening how quickly businesses can change. It took three years for iPods to reach 50m sales – not great for the sellers of CD players or CDs. Facebook took just two years to get 50m users, and now has over 500m (more than the population of all but the three largest countries in the world). The Post Office became one of the biggest players in the UK foreign exchange market in just four years -  and that was before the internet revolution. How long will it take new entrants to the legal space I wonder???

In some industries, you just can’t see change coming. I am sure Thomas Cook did not foresee the Post Office taking a massive chunk out of its foreign exchange business. But in the legal market, the changes could be seen years out. That’s a good thing – there won’t be any surprises.

Actually, that’s not true. The surprise will be how many law firms simply have not prepared themselves for the new entrants. How many firms have not revised their own processes. How many firms have not bedded in new technology to their business as usual, and started delivering cheaper fixed price services (which most can see is what consumers want). Maybe lower fixed price services will make more consumers purchase? Shock horror – but economic theory would suggest that is normally the case.

Irrespective of that, there certainty will be more competition, and we are in tough economic times, where making a profit is more difficult. I have met lots of lawyers – I can see that many will not embrace technology. They will look for reasons not to use it. And in many firms, these lawyers hold sway. The shame of it all is that consumers trust lawyers despite their high fees.  But once these consumers have been captured by the big brands, you can be sure they will be very hard to win back.

The firms who aren’t ready to embrace technology are soon going to find out that they have to be ready. Readiness is not something that will happen outside of the firm. The time of readiness is here, now. Technology has to be put to work better in delivering the law. To make profit in the recession, and to be ready for when the new entrants arrive.

The great Franklin D. Roosevelt said the only thing we have to fear is fear itself. In 2011, I can see the time has come for firms to stop seeing the problems, and start to see the opportunities technology can bring them – before some big brand shows them how cheap law really can be delivered.