DIGITAL DISRUPTION IN PROFESSIONAL SERVICES: What Does It Mean for Legal Marketing Education?

By Tuzovic, Sven | Strategies: The Journal of Legal Marketing, November-December 2015 | Go to article overview

DIGITAL DISRUPTION IN PROFESSIONAL SERVICES: What Does It Mean for Legal Marketing Education?


Tuzovic, Sven, Strategies: The Journal of Legal Marketing


Consider the following scenario: Andrea is an international tax, contract and corporate lawyer based in Paris, France. He provides legal services for $75 an hour. His work history includes 21 jobs, 631 hours worked, and he has a 4.98 rating out of 5. And yes, all those numbers are real. Now consider the following questions:

1. Is Andrea a competitor to lawyers located in the United States?

2. Does Andrea pose a threat to the revenue of law firms in the United States?

3. What are the marketing skills needed to deal with the new emerging landscape?

Dramatic New Landscape for Professional Services

The answer to question 1 is clearly "yes." The landscape for professional service firms is currently experiencing dramatic changes driven by four key factors.

First, the context in which professional services are delivered has fundamentally changed in many respects. Advances in communication and information technology (e.g., social network technology, mobile technology, cloud computing, knowledge work automation and the Internet of Things) have reduced the need for face-to-face contact in the provision of many services.

Second, the emergence of modularization means that services, tasks and processes are increasingly split into small elements among different actors within a value network. Companies then decide to either keep those tasks in-house or outsource them to an external service provider. Consequently, the traditional bilateral supplier-customer relationship is evolving into a complex multi-actor service ecosystem of value creation.

Third, competition has become global in nature. In the past, services used to be considered as non-tradable across borders; however, national boundaries do not apply anymore to knowledge-intensive business services such as IT applications, finance and accounting, engineering, human resources and legal services. Official statistics from the Organization for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO) show that the share of global exports of services has been growing steadily, reaching more than 20 percent of world trade. As a result of the international tradability of services, professional service firms find themselves location independent.

Fourth, competition has become more intense as companies and clients look beyond the developed world to find access to high-end knowledge-intensive professional services at lower costs. For example, Singapore Airlines outsourced processes such as financial accounting and payroll functions to specialized offshore service providers in India and the Philippines in order to cut non-fuel expenses by 20 percent. As large companies employ a multi-sourcing strategy to access expertise and capabilities across the globe, offshore services have now evolved to be a dynamic global sector, gaining market share with lower labor costs.

Driven by these rapid changes, many law firms now see a need for an emerging role of marketing and business development professionals.

Moving from a Business Economy toward an Economy of People

Besides these four driving forces, law firms face another, even more severe challenge: industry disruption by technology. This leads back to the second question asking if Andrea would pose a threat to the revenue of law firms in the United States. One can argue that one single person does not change the balance of power. However, we are observing a transformation from a business economy with traditional business models to an "economy of people" (aka "sharing economy"). Within B2C, we have witnessed how new entrepreneurial, "born digital" firms have been disrupting existing value chains. Think about startups such as Airbnb and Uber that are challenging traditional travel vendors. According to a recent Wall Street Journal article, Uber is now valued at more than $50 billion. Its rapid appreciation is just one example of how a new breed of fast-growing companies is disrupting traditional business ecosystems. …

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