Innovating Toward a Better Normal: Using Product-Market Fit to Serve Clients Better After the Pandemic

by Jack Newton and Ed Walters

2021 was a difficult — but transformative — year, where lawyers were challenged to operate in a pandemic and economic downturn. What are lawyers doing to innovate, operate, and build their practices in a rapidly changing landscape? How are we building toward not just a new normal, but a better normal? In this article, we share practical examples of how small law firms around the country have designed simple yet innovative legal services that insulate their businesses during times of volatility and best prepare them to thrive in the future.

Not a New Normal

Instead of talking about a “new normal” — an already-tired phrase to describe a post-pandemic world — let’s instead look to how we might create a “better normal.” These are difficult times, but we have an opportunity, now, to reshape the world around us and design a future where access to justice is a reality for all. Sonya Renee Taylor poignantly identifies the opportunity that lies ahead:

Building a better normal is possible. And it’s going to be made possible by adapting to the new demands of a transformed marketplace.

Last year, COVID-19 initiated tremendous waves of change across daily life as we know it, leaving a lasting impact on virtually every industry. Law firms, lawyers, and courts that were previously reticent to adopt technology were forced to rapidly adapt to a new reality, or be faced with irrelevance or failure. Change that may have otherwise taken a decade or longer happened in a matter of weeks. Some law firms couldn’t adapt quickly enough, and their businesses and clients paid the price.

But some firms did adapt. We saw firms of all types, including highly traditional firms with dated on-premise technologies and traditional bricks-and-mortar offices, make a transition to a cloud-based, fully distributed way of working with such speed it was almost inconceivable. Firms that already had cloud-based technology had a head start, but still had a significant adaptation to undergo in terms of how they work both internally and externally.

However, those firms that did find ways of adapting are now set up to reap disproportionate successes. They are positioned to focus on strategies to best serve their clients while protecting the long-term financial health of their firms — a critical consideration as the aftershocks of COVID-19 continue to ripple throughout the economy. We’re all struggling right now, but those who’ve adopted cloud technology to run their law firms and fully embrace distributed work are best positioned to emerge from this crisis stronger.

Leading with Empathy

Looking to how we navigate toward this better normal, it’s crucial we lead with empathy — for ourselves, for our clients, and for our colleagues.

What does that mean, practically speaking? Now more than ever, it’s critical for law firms to get laser-focused on what clients actually want out of their legal experiences, so that they’re not wasting precious time or money on anything else. Stop spending time and money sending letter updates via mail when a simple email update will do.

Today, law firms must remember that taking a client-centered approach does not mean taking a client first approach, and that the health and financial wellbeing of their families, staff, and their business must be taken care of so that they can serve clients and keep law firms running. Maybe you ask your clients to top up their retainers sooner than you normally would to protect cash flow at your firm. Certainly, many clients are likely facing financial difficulties of their own, but you won’t know what’s possible until you ask, and you may be surprised at the answer.

Now is the time for those in the legal industry who have already adopted technology to lead with empathy for their less technologically inclined counterparts. COVID-19 triggered a mass migration to the cloud for law firms, and whether we’re still working remotely or not, it’s clear that the legal industry needs the adaptability provided by the cloud long term. The faster we can get each other up and running, the better.

Encourage those moving to the cloud for the first time as they face new challenges. Be bold and share your successes online so that others can learn from them. Take care of yourself first, but if you’re able, meet with a colleague you know who’s struggling with technology to answer some of their questions — you might make a significant difference in the health of their law firm long term.

Finally, if you own a law firm that has struggled to adapt to a distributed work reality, lead with empathy for yourself, and focus on the future. The best time to adopt cloud-based technology at your law firm was five years ago. The second-best time is today.

The technology is available now to enable lawyers to work from anywhere, while providing the same level of client service as from their traditional office space. For lawyers and legal professionals that have yet to move to the cloud, there’s no time like the present.

Planning in Uncertain Times

We won’t ever return to a pre-COVID “normal” (and as we mentioned previously, we shouldn’t want to). The pandemic has forever altered consumer expectations for working with lawyers, and has accelerated change the industry would have otherwise undergone over the coming years.

Most law firms recognize this. According to Clio’s 2020 Legal Trends Report, as many as 75% of law firms predicted that circumstances around COVID-19 would have longer-term impacts on their businesses even after the pandemic ends. The best and most productive option now is for legal teams to use this opportunity to find innovative solutions to better engage with clients moving forward. And while technology is not a panacea, it’s certainly key to success in our new normal.

Plenty of law firms have already adopted virtual technologies that enable remote work and accommodate the evolving needs of clients. This includes the 74% of professionals that report they’re using electronic document sharing and e-signature technologies and 77% of professionals that are using video conferencing software. These law firms are looking closely at what their clients need and adapting to those needs.

Although the profession is adapting to the pandemic, most clients have not received the message.

And the benefits of adapting and adopting new tech reach beyond just affecting clients relations — the Legal Trends Report also found that legal professionals are reporting that the use of technology has improved their personal lives, with 58% of respondents saying that adopting new technologies has significantly improved their work-life-balance over the course of the pandemic. This need for both a client-centered and personal, firm-focused approach is key to being able to continually and effectively adapt as our world continues to change.

Yes, the unpredictability of the pandemic is unsettling — but lawyers who can adapt and define their own new normal will see their businesses not just survive, but thrive. Many legal issues can’t be put off indefinitely, and an industry shift towards digital transformation will ensure that law firms get clients, and clients get the legal services they need.

This is particularly important, given that many experts project that there will be a flood of demand, specifically around COVID-19-related issues (especially as consumers begin to pursue legal matters they’ve put off since the start of the pandemic). Still, the legal industry must be proactive in changing consumer perceptions around the availability of digital legal services, and in lowering the barriers for consumers to access those services — you may have adapted to your client’s needs, but you need to make sure your clients know that new, virtual options are available.

Understand that COVID-19 has had a profound effect on consumers and their businesses, just as it has yours: legal buyers are struggling with cash flow, child care, information overload and all the other stressors that have been introduced to our lives. Communication, as well as lowering barriers by trying new business models, updating processes and procedures and implementing the right technology, will be key.

The path ahead may seem daunting. But it also presents opportunities for the legal industry to leverage technology and better serve clients. The future of law lies in your ability to keep adapting to what the world needs, so planning as best we can for an uncertain future is essential. Together, we’ll build a better normal.

The Access to Justice Gap as a Product-Market Fit Problem

“Nothing is more responsible for the good old days than a bad memory.” - Franklin Pierce Adams

One of the many long-standing issues in the US has been the barriers preventing people from accessing legal services when needed. The social and economic issues of 2020–21 have only increased these barriers. And while this has been a discussion that’s largely taken place in the realm of legal aid and pro bono work, it’s time to look at this as the larger, more systemic issue that it is: a product-market-fit problem.

The product-market-fit problem is one characterized by a business — or industry — delivering a product that is out of sync with market demand. The issue manifests itself in the form of a massive latent market for legal services, where the majority of those needing legal help don’t get it — which is also a missed opportunity for law firms. Recent studies show: 77% of legal problems don't receive legal help, and 86% of civil legal problems faced by low-income individuals receive either inadequate or no legal help at all.?

In the past seventeen months, we’ve seen the market shift in a dramatic way, where the overall need for legal services has remained strong, if not increased, due to problems related to the pandemic, yet the outbreak of COVID-19 has reduced people's access to legal services even further.

Since the start of the pandemic, the number of consumers anticipating a legal problem has remained high throughout 2020, ranging from 16% in April to a high of 25% in May, with between 13% (in April) and 22% (in July) anticipating a legal issue related specifically to coronavirus. Yet despite these needs, surveys from April to July 2020 show that between 40% and 50% of consumers would put off dealing with a legal problem until the circumstances surrounding the pandemic subside.

In 2020, even as new matters and billings declined over the summer, demand for legal services rebounded in the fall.

At the same time, record-breaking unemployment rates, economic slowdowns, and reduced court services have only increased the barriers to legal services. Even if individuals wanted to deal with a legal issue, court systems have reduced their capacity, if not halted proceedings entirely. Courts have also yet to earn people’s trust in its ability to conduct remote hearings: Surveys from April to July indicate that between 38% and 46% of consumers believe that a virtual trial would negatively affect their case outcomes.

Beyond the pandemic, 2020–21 has seen a surge in protests against racism — the Black Lives Matter movement in particular — which, in the legal world, has put a spotlight on how access to justice must also mean access to fair outcomes. According to the 2020 Legal Trends Report, 72% of legal professionals believe the US judicial system suffers from systemic racism, 65% believe that the race or ethnic background of a person significantly affects their ability to receive fair outcomes for their legal issues, and 60% believe the race or ethnic background of a person significantly affects their opportunity to pursue a career in the legal profession.

Product-Market Fit 101: Lobster Law

To understand the product-market-fit problem from the perspective of a client, imagine going to a restaurant to buy a lobster dinner. The menu is full of options, but the lobster is listed at market price. When the server comes to take your order, and you ask what the market price for lobster is, the server says, “It depends.”

Your server elaborates: “It depends on the temperature of the water the lobster is pulled from. It depends on the route the truck driver took from the lobster pound. It depends on the spot price of natural gas tonight. And it depends on who cooks it. We have a master chef in the back who specializes in preparing lobster, who studied at the Culinary Institute of America. But if you want to save some money, we have a very promising sous chef who could cook it for you for less. But don’t worry: the price of the lobster will be on your final bill.”

If the market price for lobster were calculated like this, nobody would ever order lobster. All of the risk is on the diner, who is obliged to pay whatever price is on the final bill. The diner would order a dish they wanted less, or pay a higher fixed price for something else, than to order lobster at an indeterminate market price.

If all of the prices at a restaurant were “market price” in this way — variable and unknown to the diner until the final bill (which they are obliged to pay in full), nobody would ever eat at that restaurant — they would eat somewhere else.

If all restaurants charged these kinds of opaque market prices, nobody except the wealthiest, most risk-averse diners would eat out. More people would cook for themselves at home.

As a profession, we work at this restaurant.

So it is no wonder that the vast majority of our clients are eating at home — coping with their legal problems without the help of lawyers or the legal services market. The way we price our services places all the risk on clients, the purchasers of legal services.

Many people talk about the access to justice gap as if it is an exogenous problem to the legal services market. They reason that legal services are inherently expensive and that persistent poverty is a terrible problem that lawyers cannot fix. It’s not the legal profession’s fault, some say, that more people cannot afford to pay for expensive legal services.

The product-market fit problem is not uncontrollable, and the access to justice problem is as much about risk as it is about price. People aren’t asking the market price of legal services, then leaving law offices because the cost is too high. Clients aren’t consulting law firms because they bear all of the risk of high costs.

Howard Schultz did not lament the “access to coffee gap.” He made coffee that people wanted to drink, put it in places that were convenient for consumers, and made it easy for them to buy it.

Uber didn’t suggest better SEO and profiles for cab drivers, it took the risk out of paid intercity travel by posting how far away drivers were, how much rides would cost, and how long they would take. Even when Lyft or Uber cost more than taxis, people prefer them because knowing these things makes travel less risky for consumers.

Services like these vastly expand the size of their markets because product-market fit helps them reach consumers that traditional services cannot.

The Thomson Reuters Legal Executive Institute recently estimated the size of the legal services market in the United States as $437 billion. And that is only the 15–20 percent of people who are availing themselves of law firm legal services. The other 80 percent — the latent market for legal services — probably isn’t 4 times the size of the $437 billion market. But it’s estimated to be comparable in size, which means the true size of the legal services market in the U.S. is likely closer to $1 billion.

Half of that market is eating at home — fending for themselves to deal with legal problems. This is simultaneously a tragedy of global proportions, and a giant opportunity for lawyers to address a latent market that needs their help. As we look to build a more resilient and equitable system for the future, we need a vision to get us there.

Toward a Better Normal: Building a Client-Centered Law Firm

If there’s one opportunity that stands out for legal professionals considering how to rethink the delivery of legal services amidst a pandemic, it is to consider the idea of designing legal services in a client-centered fashion.

When the research shows that some crucial elements to the practice of law are broken, specifically in the realm of client service, this should be a rallying call to fix them. As business practices and technologies evolve, legal professionals should think hard about how to improve — both to benefit themselves, and their clients.

According to the 2019 Legal Trends Report, 60% of law firms don’t respond to email inquiries from prospective clients, and 27% are unreachable by phone. This data is based on 1,000 emails and 500 phone calls to a random selection of US law firms across five different practice areas. Of the firms contacted, the vast majority were unable to provide some of the most important information that a typical client looks for — such as whether the firm could help with a particular type of case, an indication of rates or overall cost, or what next steps would be if the client were to pursue their case.

Success in the market for legal services is wholly dependent on meeting the needs of clients, and clients have more freedom now than ever to choose who they work with, who they hire, and who they won’t hire. This is a reality that is increasingly shaped by publicly accessible online reviews.

As consumer expectations shift alongside the rise of modern cloud technologies, clients have suffered patiently as law firms struggle to adapt to new, more efficient ways of running a business.

Clients know a better experience is possible, and they expect it everywhere. They use Google, instant messaging apps, and online credit card payments every day, which means they notice when a law firm hasn’t bothered to adopt these technologies. People used to be willing to play phone tag, but now — with options like texting and online scheduling tools — clients are more discerning about such inconveniences.

The myriad of tiny interactions that happen before, during, and after a consumer buys a product might seem inconsequential individually, but collectively they can make or break a business. This is true whether your organization sells a tangible product or provides a service.

When we say that the future for law firms is client-centered, we say this because it’s the only way that firms will survive. Through the market of natural selection, firms that evolve in a way that meets client needs are the ones that will earn better reviews, more referrals, and more returning clients. This doesn’t need to come at the expense of the firm itself — far from it. Client-centered firms know that providing good client experiences and running an efficient, profitable law firm aren’t opposing ideas. With the right approach, they drive each other.

These are the trends that we’re seeing in the legal industry, and across all professional services, and it’s important lawyers have the tools and knowledge they need to succeed in their evolution.?The Client-Centered Law Firm?is both a rallying call for a tectonic shift in the legal industry and a handbook for becoming a client-centered law firm. Divided into three parts, covering the what, why, and how of running a client-centered practice, it features numerous examples from forward-thinking legal professionals who are already putting client-centered practices into action.

The opportunity for law firms today is tremendous, and client-centered thinking provides a powerful framework for reconsidering how legal services might be designed and delivered.

Jack Newton (@jack_newton) is the founder and CEO of?Clio?and a pioneer in cloud-based technology. He co-founded and is President of the Legal Cloud Computing Association (LCCA), a consortium of leading cloud computing providers with a mandate to help accelerate the adoption of cloud computing in the legal industry and is the author of?The Client-Centered Law Firm, a bestseller that’s helping law firms thrive in today’s experience-driven era. He was also named a 2019 Fellow to the College of Law Practice Management, sits on the board of Pro Bono Net, and is an investor and advisor to early-stage legal tech startups.

Ed Walters (@EJWalters) is the CEO of?Fastcase, a legal information company based in Washington, DC. He is an adjunct professor at Cornell Law School and at the Georgetown University Law Center, where he teaches?The Law of Autonomous Vehicles. He serves on the board of directors of Pro Bono Net, Public.Resource.org, and Lexum, and he serves on the Leaders Council of the Legal Services Corporation. Ed is the author of?Data-Driven Law?(Taylor & Francis 2018) and a contributing author to?Legal Informatics?(Cambridge 2021).