At the 2010 International Legal Technology Conference session “A New View of the Automated Law Firm”, my co-panelists and I discussed how changing market dynamics and technology might force firms to become either a “Law Factory” or a “Bet the Farm” firm. With this post, I inaugurate a new blog category to continue that exploration..  

Gerard Neiditsch, Executive Director Business Integration and Technology, Mallesons Stephen Jaques; Jeffrey Rovner, Managing Director for Information, O’Melveny & Myers LLP; and Mary Abraham, Counsel, Debevoise & Plimpton LLP, and I presented at ILTA in Las Vegas on Aug 25, 2010 (INFO11, #INFO11 hashtag).

We postulated that firms would gravitate toward poles on a spectrum: “bet the farm” firms focusing on high-stakes matters versus “law factory” firms focusing on run of the mill cases. Think “hand crafted” versus “industrial processes.” For more information, see our slides A New View of the Automated Law Firm or read the blog posts summarizing the session: Legal Current post by Andrew McLennan-Murray, Applications Integrator, Thomson Reuters, Legal and Hubbard One post by Charlie Vanek.

Two recent Business Week articles (Sept 6-12) prompted thinking about this theme. Ryanair’s O’Leary: The Duke of Discomfort explains how the CEO of Ryanair, Michael O’Leary, “is remaking commercial flights in his image: shabby, crabby, and cheap, cheap, cheap.” At one time, all airlines thought of themselves of high end and exclusive, charging high prices and offering comfort. Ryanair reverses the model, doing whatever it can to bring price down, eliminating comfort as a byproduct of doing so.

O’Leary illustrates that re-thinking an established product or service changes the game. The moral is not that prestigious BigLaw firms should cheap down service. Rather, it’s that the accepted wisdom about what clients want may be wrong. What looks like a single market may have many segments. Bet-the-farm BigLaw firms may find that some of their practices need to be more like Ryanair. In our preparation and during the panel, we struggled with the question whether these law-factory practices could survive in bet-the-farm firms. For whatever it’s worth, in the airline industry, high-end and discount cannot seem to co-exist in the same company.

P&G Looks to Franchise Tide Dry Cleaning offers a seemingly opposite lesson. It explains that Procter & Gamble will franchise the Tide detergent brand to local dry cleaners. Here, a widely-recognized and trusted brand will try to bring order and consistency to “a fragmented market where consumer expectations aren’t high.” (Personally, I’ve never seen a dry cleaner I liked.) A potential lesson here for BigLaw is that their brand names may bring value to some law factory work that has, to date, left clients unsatisfied. But just as P&G faces risk in extending its brand, so too would BigLaw. And note that P&G is not going directly into the dry cleaning business; franchising off-loads the operations. That model is likely not easily available for law practice.

The business world offers many models and experiments. Whether we really see a dichotomy of firms is an open question but it would be shocking if we did not see more variation in the future than we have in the past.