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There has been some confusion about legal electronic commerce. On one hand it is the use of technology to enhance and support the current way of delivering legal services. Things like dealrooms, online reporting and e-mail do not change the fundamental nature of the traditional legal service. They use the internet to enhance, support and render a more impressive service. The other strand to electronic commerce is the delivery of knowledge online. It is a new service altogether. What the two have in common is that they are using the same sorts of enabling technologies such as the intranet and the extranet. In due course, and it is not going to take very long, the first strand of electronic commerce is going to be compulsory. You cannot not have the phone, you cannot not have the fax, you cannot not have e-mail and you cannot not have processing support. There is some fascinating competition going on among law firms at the level of dealrooms and all the rest of it.But, this is going to become non-competitive stuff that you are going to have to have if you want to stay in business.My advice to the industry is to collaborate and create standards, because clients want all the information to be synthesised and focused on their own needs. It is the knowledge stuff where the competitive advantage is going to derive from – and so it should be. It should not be that a law firm succeeds in the market because it has better warehousing of documents, document storage, electronic communications or basic plumbing. What really differentiates law firms is their knowledge. If firms are really investing in technology and the exploitation of technology for competitive advantage in the medium to long term they should look at the delivery of knowledge online. Investing in dealrooms and e-mail is something firms have to do, but this is not going to move them ahead of the industry. There has been a huge amount of hype from a lot of firms just now: announcing this, that and the next thing. When all of that settles, this will not be a competitive area at all. There will be standard packages out there. But where law firms will always compete will be the quality of their lawyers and the quality of the knowledge that is embodied in their internal and external systems.This is the only place where there are real direct revenue opportunities. You can point to a number of systems that are already wiping their faces as it were. They are making money, but it has not transformed the legal profession yet. Four years ago, I said it would take 20 years for that to happen. It will happen. Within 16 years the main way in which legal guidance is imparted will actually be online. A professor from Harvard, Clayton Christiansen, has introduced a vital distinction between two forms of technology: sustaining and disruptive. Sustaining technologies are those technologies that support, enhance and strengthen the current business model. Disruptive technologies are technologies that fundamentally challenge the main business model. When some businesses see a disruptive technology they think “Well, I can see it is important for some organisations, but we are really involved in a different business altogether”.Then suddenly something that looks peripheral, low key and for the lower end of the market, actually blossoms.My big question is the extent to which the internet is a disruptive technology for the legal world.I believe it is. The internet will change the whole nature of legal service. It is interesting when you speak to partners in firms who are quite enlightened about technology.They get enthusiastic about dealrooms, e-mail, online reporting, in-house knowledge management and better infrastructure, because they do not challenge the current business model. You can see why this is not particularly threatening because it supports the current way of doing things.Someone once described to me the dilemma he faced when making a presentation about the internet to a group of partners in a magic circle firm. As he put it: “How can you tell a roomful of millionaires that they have got their business model wrong?” There is a lot in that. You are coming in and saying: “I know you are all terribly successful,but there is this thing that is lurking on the horizon called the internet, which could fundamentally change the way you do business”. But that is characteristic of Christiansen’s analysis of the position of the excellent, outstanding company. What he is saying is that many excellent, outstanding companies may fail entirely if they fail to recognise disruptive technologies.Lawyers are uncomfortable with the internet because it challenges all manner of assumptions about the nature of a business that provides them with quite a good living. But the delivery of knowledge online will be a fundamental building block of the legal service process in five to 10 years and within 16-20 years it will dominate the delivery of legal services.

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