Innovation everywhere …

Innovation everywhere …

As real estate lawyers, we face innovation threats from two directions. First, there are threats to the legal industry, and second, there are threats to the real estate industry.

Threats to the legal industry

Following is a partial list of threats to the legal industry; none of this is news, of course:

  • Alternative service providers, such as companies like Axiom, real estate brokers, insurance companies and accounting firms
  • Pressure on rates - some clients focus on the formula
  • Pressure on fees - some clients focus on the bottom line
  • Pressure on staffing - some clients don’t want law firms to staff with lawyers who are just starting out, because they don’t want to be charged for training
  • Demand for certainty of fees, or at least an identifiable range
  • Demand for more value - great legal work is the assumption; clients want insights, market knowledge, relationships and risk assessments
  • Legal work being taken in-house
  • Legal work being taken off-shore
  • Artificial intelligence
  • Blockchain

Threats to the real estate industry

Before we get to some of the things that are disrupting the real estate industry, we should ask why it matters that the industry we serve is being threatened. The reason is that as our clients are disrupted and disintermediated, we suffer because those industry incumbents lose to insurgents. And unless the insurgents become our clients, we’ll lose along with our clients.

So here are some of the threats to the real estate industry:

  • Virtual employment relationships
  • Remote working locations
  • Less area per employee
  • Off-shore workers
  • Companies that use space in different ways (eg WeWork, StarCity, Kennect)
  • Driverless cars
  • Transit-based development
  • Shorter, more flexible lease terms
  • Retail apocalypse and the repurposing of retail assets
  • An ageing population
  • Millennials, who buy experiences rather than stuff, who rent or share rather than own, and who change jobs more frequently
  • Artificial intelligence
  • Blockchain

So what’s a real estate lawyer to do?

In the face of these disruptions, we real estate lawyers need to reset our thinking and our approach. Specifically, here is a list of things that each of us can do. The list is too long for each of us to do everything. But this is as much about mindset as it is about specific tasks. It is more about framing than a to-do list.

  • Seek to understand what is changing and why
  • Look for ways to be creative. Specifically, think in terms of the meaning of the word “creative”, that is, create new things, new ways of doing things
  • Follow the technology, for two reasons: (i) it helps us to understand what is changing; and (ii) it gets us thinking about how technology can disrupt
  • Talk with our clients. Learn what they are seeing and what they’re worrying about. And learn what opportunities they see, and figure out how we can help them change and take advantage of changes
  • Lead - no matter where each of us sits. The future belongs to the young. If you are young, lead now. Don’t wait to be told to lead, and don’t wait for permission
  • Our business is going to be cannibalized. We can do it to ourselves, or we can wait for someone to do it for us

"There are only two groups that do their jobs the same way they did them 50 years ago: ditch-diggers and lawyers." David Glickstein

The trick isn’t predicting the future; it is recognizing that the future has arrived. It is time to start adapting ... and leading. And remember that if we do start now, we’re ahead, because most of our peers are stuck, afraid to move.

Good luck!

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