Is "free" a potentially workable business model for legal services?

Chris Anderson wrote last year in Wired:

It’s now clear that prac­ti­cally every­thing Web tech­nol­ogy touches starts down the path to gratis, at least as far as we con­sumers are con­cerned. Storage now joins band­width (YouTube: free) and pro­cess­ing power (Google: free) in the race to the bot­tom. Basic eco­nom­ics tells us that in a com­pet­i­tive mar­ket, price falls to the mar­ginal cost. There’s never been a more com­pet­i­tive mar­ket than the Internet, and every day the mar­ginal cost of dig­i­tal infor­ma­tion comes closer to nothing.

via Free! Why $0.00 Is the Future of Business.

Jason Plant takes this idea and extends it to law firms: could a law firm really offer ser­vices for nothing?

Could we every get to the point that the knowl­edge sys­tems in law firms become so good that a sim­ple search could trawl thou­sands of prece­dents and cases in a firms KM (Knowledge Management) and DM (Document Management) sys­tems and bring you back the agree­ments that could be used with vir­tu­ally no partner/associate bill­able time. Meaning very low costs that could be cov­ered else­where (e.g. by adverts)?

via Free! Why £0.00 Is the Future of Business.

A lit­tle more back­ground on the con­cept pro­vides more con­text. So, first Chris Anderson notes the pow­er­ful dif­fer­ence from the con­sumer per­spec­tive between free and cheap:

From the consumer’s per­spec­tive, though, there is a huge dif­fer­ence between cheap and free. Give a prod­uct away and it can go viral. Charge a sin­gle cent for it and you’re in an entirely dif­fer­ent busi­ness, one of claw­ing and scratch­ing for every cus­tomer. The psy­chol­ogy of “free” is pow­er­ful indeed, as any mar­keter will tell you.

Chris also points out that “free” does not mean that some­one, some­where isn’t mak­ing money — advertiser-support Web sites are a key exam­ple of this:

Traditionalists wring their hands about the “vapor­iza­tion of value” and “demon­e­ti­za­tion” of entire indus­tries.… But free is not quite as sim­ple — or as stu­pid — as it sounds. Just because prod­ucts are free doesn’t mean that some­one, some­where, isn’t mak­ing huge gobs of money. Google is the prime exam­ple of this. The mon­e­tary ben­e­fits of craigslist are enor­mous as well, but they’re dis­trib­uted among its tens of thou­sands of users rather than fun­neled straight to Craig Newmark Inc. To fol­low the money, you have to shift from a basic view of a mar­ket as a match­ing of two par­ties — buy­ers and sell­ers — to a broader sense of an ecosys­tem with many par­ties, only some of which exchange cash.

I do not believe that the length­en­ing eco­nomic reces­sion has not proven any of this wrong, although more and more busi­nesses are strug­gling to find ways to fund the very real costs that exist. Even if mar­ginal costs per user are still drop­ping towards zero, servers, band­width, and stor­age still cost the provider real money. Yet, con­sumers appear even more price con­scious today, and pay­ing any­thing at all can seem like too much. The short-term chal­lenge for many com­pa­nies is to sur­vive when third-party fun­ders are harder to find, and cus­tomers are shy about pay­ing for any­thing. Perhaps as con­sumers see com­pa­nies with ser­vices they value go out of busi­ness, the mas­sive gap between “free” and “cheap, but nor free” will lessen — but I wouldn’t count on it.

Back in the legal world, how­ever, it is more of a stretch to me to imag­ine how this would work. Certainly it is pos­si­ble that Jason’s Knowledge Management ser­vices may well make sim­ple legal queries cheaper. Even now, self-help legal Web sites have grown beyond what was ever avail­able pre­vi­ously, and open-access legal search makes case law increas­ingly acces­si­ble to every­one (in a tech­ni­cal sense, any­way). Technology will increas­ingly make rou­tine legal mat­ters — wills, real estate con­veyances, sim­ple con­tracts — pos­si­ble to han­dle with­out a lawyer, or with­out pay­ing a lawyer a great deal of money.

But while I sus­pect these ser­vices might extend legal access (“access to jus­tice,” as it’s termed), I am not con­vinced that it will under­cut the legal mar­ket as a whole, at least not in the short-to-medium term — not until human intel­li­gence is sig­nif­i­cantly replace­able by arti­fi­cial means. Thus, ser­vices based on human input, cre­ativ­ity, and analy­sis will be the last out­post of replace­abil­ity. For exam­ple, musi­cians have not been replaced. Humans still need to cre­ate orig­i­nal music. It is the dis­tri­b­u­tion model that has changed.

Distribution, as the music indus­try has found, is sub­ject to tech­no­log­i­cal replace­ment. Similarly, dis­tri­b­u­tion of legal ser­vices is already under­go­ing changes, as “vir­tual law offices” emerge, and some ser­vices are even out­sourced to other coun­tries. Barriers — bar mem­ber­ship require­ments for exam­ple — might make this chal­leng­ing, but those are, in a sense, arti­fi­cial bar­ri­ers, as are copy­right laws.

This, musi­cians can still earn money for in-person con­certs, where it is impos­si­ble to repli­cate the human ele­ment. The same will con­tinue to be true for attor­neys. But dis­tri­b­u­tion of legal analy­sis, as with music, will change.

There are key dif­fer­ences, though: music does not require mod­i­fi­ca­tion based on con­text, while legal analy­sis is incred­i­bly fact and juris­dic­tion spe­cific. So dis­tri­b­u­tion will get cheaper, but mar­ginal costs — due to mod­i­fi­ca­tions and appli­ca­tion — will not drop as much in law as in music. Still, “freemium” busi­ness mod­els, or mod­els where third par­ties pay, may well be exten­si­ble to legal ser­vices. For exam­ple, firms per­haps could pro­vide sim­ple wills and con­tracts for free, and charge for cus­tomiza­tion. Legal analy­sis in a broad sense could also be free — but you need to pay us to apply it to your facts (is this not what legal blogs are doing now?).

So lawyers are safer than musi­cians in this sense — but nonethe­less tech­nol­ogy will rev­o­lu­tion­ize legal ser­vices, and law firms that adapt to the ideas behind “free” as a busi­ness model will sur­vive and pros­per — those that fail to adapt will not.

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