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Any discussion of how "the business model of the legal profession" is changing, whether due to covid or otherwise, needs to start with a basic, but often ignored point. The most fundamental question is "does the practice focus on repeat customers of legal services or one-offs"?
Examples of repeat customers are, of course, huge corporations (and also some wealthy individuals, although that market is nowhere near as big). Examples of "one offs" are, of course, individuals and most small (and maybe medium) sized businesses.
If you are in the business of dealing with repeat customers, everything comes down to relationships, the longer term the better. The exact financials are subject to discussion, but GENERALLY most big corporations mostly prefer to stick with hourly billing.
Mostly what they are after is predictability. They mostly know what a small contract dispute with a local vendor will cost. For big matters, e.g. a patent dispute with a big competitor, an major acquisition, they care, but they don't, about how much this will cost.
There has been talk for decades about moving towards alternative fee arrangements. I have always thought it sounds great in theory, but the corporate buyers mostly haven't gone for it. For them, the main "alternative fee arrangement" that they've really jumped into is
Bringing the attorneys IN HOUSE. That's the "alternative fee" that they want -- let's make the lawyer and employee, pay them a salary and be done with it.
On the "one off" side it seems to depend a lot on the type of issue. So, first of course there is contingency fee work, where the lawyer gets a percentage of the recovery. In that case, the main "business model innovation" was the rise of mass advertising --
over the VOCIFEROUS objections of the bar associations -- which objections were only overcome once the Supreme Court ruled for that the bans were unconstitutional. The plaintiffs bar has kept up with changes in advertising tech, i.e.
they now do google and facebook ads in addition to tv ads -- which are going as strong as ever. For other types of matters, where the client is paying out of pocket, there is significant amount of flat fee work for, e.g. drafting a will, uncontested divorce, or (??) patent
But for anything that involves going to court, I believe that the vast majority of those are still billed hourly, same as they were in 1950. The main "business model" innovation relates to getting more clients in the door, i.e. advertising, including through directories
But note that legal directories have been around for about 150 years in America and, from what I can see, the online versions aren't THAT much different from the books.
Back to corporate clients. I would say the one major "business model innovation" was the phenomenon, pushed hard by the silicon valley firms starting in the 90s, of taking equity in startups in lieu of hourly fees.
But mainly my guess is that the main "business model innovations" in legal services aren't going to come from law firms at all, but from alternative legal service providers on the corporate side, and from online services on the "one off" aka consumer side.
At the moment, these are, imho anyway, stifled by regulations, although nonetheless succeeding.
Another important source of innovation though, is harnessing the power of software to manage legal relationships. In the medium to longer term, I expect AI (a loaded term but I use it for lack of a better one) to be a major force here.
In the shorter term, I see #smartcontracts -- where independent, impartial, distributed networks use software to manage (or partially manage) transactions -- will truly unleash innovation by finally allowing the legal system to take full advantage of the power of software.
Legal services are (mostly) now, where software was in 1969 -- the big players can afford it, but everything (or almost everything) is a custom job. In 1969 the idea of an individual or small business using software was mostly a pipe dream.
The rise of software, starting with, e.g. the rise of visicalc, changed all that. Soon we were using software at scale. And the whole world changed.
The application of software to managing legal issues has always faced the obstacle of trust. By defition, legal issues arise between people who don't quite trust each other -- that's why we need the legal system involved, to help manage that lack of trust between the parties.
And so, the use of software was limited because it got stuck on the question of "who controls the software" But now -- thanks to the success of bitcoin -- we have an alternative.
Bitcoin was of course important for many reasons, but not the least was that it showed how a network could work, could thrive, without a central party controlling it. As we generalize that approach to running programs generally, we get to the idea of a smart contract --
A program that both parties can trust because neither party controls it. This of course was why Ethereum was and is such a crucial step.
As we generalize further, we see that getting reliable data INTO a smart contract is essential as well -- the "I" in "I/O" matters just as much as the "O" indeed mostly you can't have one with out the other.
And the value of the @chainlink project therefore is that it takes the idea of decentralized control one step further -- as a way to ensure that the data used as inputs for automated contracts is trustworthy, accurate and reliable.
The pieces are coming in to place for truly innovative models of how the legal system can operate at scale. Watch this space.
