Digitalization-effects on the legal industry: Emerging business models

Abstract

Purpose – This empirical paper addresses the effect of digitalization on professional service firms (PSFs). In particular, we apply business model frameworks to identify important dimensions of recent disruption within this context. PSFs, such as law firms, are defined by the professional workforce they employ and the knowledge-intensive services they deliver. While the business models underpinning these firms have changed little over the past century, recent research indicates that digitalization can severely disrupt this industry.

Design/methodology/approach – We present empirical evidence from law firms applying alternative business models. Initially, data was collected through twelve semi-structured interviews in Silicon Valley in 2015. Subsequently, we conducted a media study identifying an additional 8 firms interviewed over Skype in 2016 and early 2017.

Originality/value – The findings reveal key issues related to changes in law firms business models caused by digitalization: (1) cost and lawyer flexibility as main drivers of business model innovation through technology; (2) rethinking of business models in law; (3) enacted technologies as driver of change; and (4) digitalization as a way to overcome resource trade-offs. Each of these issues can and are likely to cause extensive changes to a professional service firm’s business model.

Practical implications – In conclusion, we find that digitalization has huge implications for how professionals in the legal industry can structure their work, interact, recruit and train employees as well as design their services and interact with clients. The study of law firms contributes as an illustration of the potential impact of digitalization on a broader set of knowledge intensive organizations.