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Legal market disruption. Are we there yet?

Legal market disruption. Are we there yet?

By David Bowles, Queensland Law Society, Ethics, Innovation and Cyber-security.

Anyone who remembers the early days of online retail might recognise familiar patterns in the legal services market today.

In the mid nineties online commerce attracted a lot of speculation and interest, but real change was slow at first.  Upstarts were growing fast, but the traditional providers barely noticed the miniscule erosion of their market share.  Bricks and mortar retailers opened “online stores”, but as a small proportion of their turnover and a drag on the bottom line these struggled for relevance and attention.

It was hard to make a compelling case to divert time and resources from an already profitable business, and ambitious executives did not compete to take charge of online divisions.

Even for those facing the most obvious online challenges the threat seemed remote.  Barnes & Noble, Borders and other big-money book chains, fresh from their victory over independent retailers, doubled down on their successful business model and opened new superstores every week.  The internal thinking was that doing what they did better, with more stock, espresso coffee and comfortable lounges would shore up customer loyalty and generate better returns than the clunky and difficult to negotiate internet.  Plus which, how hard would it be to set up a website and post books once the effort was justified ?

Each Barnes & Noble superstore had turnover greater than the entire Amazon operation, and actually made money too, which none of the new start-ups seemed to manage. 

Dorm room entrepreneurs Larry Page & Sergey Brin developed an oddly named search engine and initially failed to convince anyone who mattered of Google’s potential as an advertising platform.  Even once the writing was on the wall, established players were slow to accept that their hundred year old businesses, which were still winning awards for innovative TV advertising and maintaining stable profits faced a tangible threat.  Telstra boss Sol Trujillo’s famous “Google Shmoogle” quip from 2005 is comic in retrospect, but at the time Sensis was worth 10 Billion dollars and growing – in Australia, anyway – faster than the Palo Alto upstart.

Twenty years later, Taxi operators in Australia and beyond sheltered safe behind regulatory walls and with guaranteed income from a closed market.  Service suffered and inefficiencies were passed onto consumers with a shrug.  Travel in the physical world seemed immune to digital disruption and operators were able to ignore widespread customer dissatisfaction, safe in the knowledge that the only real difference in their competitors was a different logo on the door.

None of the CEO’s of these now faded businesses got where they were by being fools.  They knew their companies and knew their industries intimately.  Every time the disruptive challengers arose, there was good reason to discount the threat as intangible or far off.

2019 leaders of law firms could do the same.  But they shouldn’t.

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