The Transactional Lawyer in the New Millennium: Facing Imminent Change
By Peter J. Birnbaum, J.D. It is a fact that the prototypical DuPage County Lawyer is from a small (1-5 attorney) law firm who concentrates on solving complex problems for everyday people. For many of you, your practices generate substantial income from real estate transactions, estate planning and corporate/closely held businesses.
It is also a fact that lawyers who concentrate in these disciplines have never been at greater risk of experiencing a significant diminution or perhaps a loss of all revenue from these areas of practice.
In my nearly 20 years in this business, I’ve never heard more negative talk from lawyers including: Early retirement and career change. General malaise seems to be the order of the day for many lawyers.
In this article, I will identify some of the major threats that transactional lawyers will face in the coming years and suggest how those threats can be converted into opportunities.
I. MAJOR THREATS:
A. Technology:
Technology, particularly the Internet, will change the way that commerce is conducted. The impact on the transactional lawyer is difficult to quantify, but we know that the changes are likely to be swift and dramatic. It is probable that real estate sales and purchases, estate planning and corporate transactions will be greatly facilitated by e-commerce. And with these new techniques, consumers will grow more self-reliant. At a minimum, the on-line consumer will demand service from lawyers that reflects this new culture of swift access to accurate and transactable information.
B. The Battle for the Consumer: Bundling of Services:
The new mantra for the national banks, Realtors®, insurance companies and financial service providers is, "One Stop Shopping". The theory is if you control the point of purchase of one consumer product you should attempt to control all other products and services that compliment your core product.
An easy example of this paradigm is the Realtors. Many of you are painfully aware of the fact that many national Realtors have recently entered the title business, the loan origination business and the home warranty business. For many of you, you have already been confronted with the situation where a home seller client has "contracted" to purchase title services from the Realtor by checking a box in the listing agreement.
We have also seen financial services firms and life companies who give customers form "loving trusts" prepared by New York law firms to facilitate trusts funded by life insurance or investments administered by the brokerage/financial services firms.
It seems clear that if the Realtor, bank or other organization can control the purchase of all of these products and services, the lawyers’ role will be diminished, if not eradicated.
These are powerful groups with powerful lobbies. They are working very hard in Washington, D.C. right now to get Congress to enact legislation, which would facilitate the ability of banks and Realtors to bundle services.
C. Multi-Disciplinary Practice:
You have probably heard all of the long-winded arguments from silk stocking firms about the virtues of allowing law firms to merge with accounting and consulting firms. You’ve also observed the hand wringing of others who say multi-disciplinary practice is inevitable so it’s time for the lawyers to cut the best deal they can.
Multi-disciplinary practice presents a host of troubling questions:
If a Realtor can own a law firm, won’t most or all of the closings be conducted by the captive firm? And, if a trust company can own a law firm, won’t most or all of the estate planning be written by the captive firm? To whom does the lawyer at these captives owe a duty: their paycheck provider or the client? What happens to the law firms who refuse to get into bed with the non-lawyer partners?
D. Professionalism and the Glut of Lawyers:
Eighteen hundred new lawyers were just admitted to the Illinois Bar. We now have nearly 75,000 lawyers practicing in this state. Who can successfully argue that we need that many lawyers?
Is it any wonder then that professionalism is at an all time low? That misuse of funds by lawyers is at an all time high? Some lawyers will do closings for as little as $195? Civility has been replaced with a win at all costs, do anything for a buck mentality?
II. EMBRACING THE PROBLEM AND FINDING THE SOLUTIONS:
Without any doubt, lawyers will face many threats in the coming years. But it is also true that with thoughtful planning and preparation many of these threats can be converted into opportunities.
A. Wag the Dog by Providing Products and Services that Consumers Want:
In the final analysis, consumers as a whole, will make smart decisions. In addition, consumer expectancy is driven by price, quality and the ease of delivery of a particular product. Look no further than the computer sitting on your desk for an example of the dramatic changes that have taken place in one industry in a few short years.
The same need to respond to consumer choice holds true for practicing lawyers. If consumers prefer to have estate planning and trust services provided under one roof, should not lawyers offer that service to their clients directly from their law firms? If real estate transactions will occur on-line, why not get in the loop by advising clients on how to take advantage of this cost savings device? If clients want to be on-line with you, plug in!
At ATG, we’re convinced that the transactional lawyer needs to provide an increasingly broad range of high tech services to their clients to compliment their role as trusted advisors. That’s why we’re developing products like Guaranty Trust Company, Capital Funding Corporation (our mortgage subsidiary), on-line realty sales and computer consulting to our members. If ATG is to live its mission of helping you "wag this dog", it’s incumbent upon us to give you the tools to compete.
B. Professionalism:
Let’s first deal with the glut of lawyers. The American Bar Association, long renowned for having little awareness, let alone empathy, for the small to mid-sized law firm, must show courage and leadership by encouraging, if not mandating reduced admission to our nations law schools. How can a profession be respected when it doubles its size every decade or so with no corresponding consumer need?
It’s also time for us to step back as a profession and remind ourselves of our value system and the oaths we all took on our day of admission. If we take a hard look at our profession, we can’t help but conclude that it is time for us to no longer tolerate the misdeeds of our peers. Each act of incivility that goes unchallenged, each act of unprofessionalism, avarice, envelope pushing or worse, that goes unrequited, diminishes us all.
III. CONCLUSION:
The years ahead will be challenging for our profession. But, we are also entering an era of unprecedented opportunity. E-commerce, wealth transfer, mergers and consolidations all present the forward thinking lawyer with the opportunity to provide new and exciting services to clients. My Latin ain’t great, but one phrase fits: Carpe Diem.
Peter J. Birnbaum is the President and Chief Executive Office of Attorneys’ Title Guaranty Fund, Inc. He received his Undergraduate Degree in 1979 from the University of Iowa and his Law Degree in 1983 from Chicago Kent College of Law.
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