This article is my next post on the state of the legal profession.
In the last article, we looked at how the actions of various State Bars are hurting attorneys.
It’s important that the profession and Bar Associations embrace technological change and see it as a new avenue for delivering legal services. But instead, some State Bars are taking steps to resist change, and these steps never work out well for those doing the resisting.
In this post, I’ll look at why the demand for legal services is (very) quickly declining. Let’s get to it.
These articles primarily focused on how quickly we’re seeing a reduction in the number of divorces, the number of criminal charges, and how automation reduces the need to have an attorney for relatively simple tasks.
These are going to mainly impact solo attorneys and small firms (those with under ten lawyers).
One thing I didn’t talk about earlier this year was the extent to which demand is drying up for those who practice in “big law” offices too. This declining demand will not only hurt the larger national firms, but it will also the smaller firms.
The reason for this is the fact that someone who would have been an associate in a large national firm will, instead, have to open up a solo operation and create more competition for smaller offices.
So small firms get hit by the declining demand in their core practice areas, and they’ll also get hit by increased competition caused by the decline in demand for services offered by “big law” too. It’s a lose-lose situation for them.
The decline in demand for large firm services has been driven by one simple thing — automation.
Why Demand for Large Firm Services is Declining
In short: The main tasks that lawyers in large firms perform are all getting taken out by automation.
To elaborate, let’s look at a few examples:
In June of 2016, JP Morgan launched its “Contract Intelligence” software. In a nutshell, the company is using AI-backed software to interpret commercial loan agreements. This is eliminating roughly 360,000 hours worth of annual work performed by attorneys and loan officers.
Another large company, McDonald’s, is among the many fast-food chains that are replacing human workers with automated kiosks.
By the end of 2017, the company reduced the use of cashiers in roughly 2,500 restaurants. Now in 2020, pretty much every Mcdonald’s has a computer-powered kiosk to take orders instead.
This is going to eliminate a huge number of wage & hour disputes, legal work related to workplace regulation compliance, and other legal issues (since, you know — machines don’t get tired, require breaks, or file complaints).
A third example is the collapse of retail stores in the wake of online shopping. Store closings, again, lead to fewer of the legal issues generated by having a large workforce.
I mention these examples because large companies are the types of clients often associated with firms in “big law.” As these companies consume fewer legal services, demand for large firms’ services will decline, which creates more competition all around.
Want proof of the effect of automation on the workplace? In 1997, there were 80,680 complaints filed with the Equal Employment Opportunity Commission. Twenty years later, in 2016, the number of annual complaints had only climbed to 91,5034.
So in twenty years, with a much larger population, the number of workplace disputes in the United States only increased by 13.4 percent.
During those same twenty years, the number of attorneys in the country increased by 38 percent.
So let’s do the math. When the amount of work for someone to do only goes up by 13 percent, but you have 38 percent more people to do the work, it’s not very good for the workers (the lawyers in this instance).
Keep in mind that demand for other legal services (divorce, criminal charges, etc.) have also been declining during this same time frame.
The facts are simple; automation is eliminating the issues that cause legal problems for large companies (labor disputes being just one example).
This reduces the demand for the services of national law firms. And at the end of the day, that’s not very healthy for the legal profession.
So at the end of the day, your law practice is a business — and it should be treated as such.
What are your thoughts on how automation will reduce the demand for legal services regarding the overall economy? Let’s start a discussion in the comments below!