I passed a nearly-gone Radio Shack outlet last night. Everything was 70%-90% off. An inveterate tinkerer and early adopter, I still couldn’t find anything I wanted, let alone something I needed.
But it got me thinking.
What’s Our Business?
What business was Radio Shack in?
I think it was – and had always been – a high-end notions store, with a little of this, a bit of that, something from everyone within a certain population. Need a resistor or a diode? An adapter for some ephemeral bit of electronica? A connector for your TV or stereo? A battery powered toy?
For a long while, they were about the only place to get such things. Go back almost 40 years. Want a computer? Your choice was the expensive Apple II or the not-quite-so-expensive TRS-80. Note the picture. Elegant? No. It said, “for specialists” all over it. Like everything else in the store.
They built repeat business from those with specific one-off needs plus a small population of incipient engineers. They never served the public at large.
They served a need, but never figured out how to build relationships with the broader customer base.
Was Radio Shack’s business that different from a law firm’s?
That’s a serious question. And a tough one.
Who’s the Competition?
Radio Shack had little real competition until the age of the Internet.
There had always been a certain amount of mail order (e.g., Edmund Scientific) and a few local shops. But Radio Shack never had to worry about a competitor.
Until disruption happened. Twice.
The first was the explosion of the personal-computer market, jump-started by the IBM PC – and the acceptance of the idea that computers were useful for individuals and small businesses. Suddenly, the underpowered, over-ugly TRS-80 and its descendants were chasing a market, rather than leading it.
And the profit margins Radio Shack had been counting on disappeared.
The second disruption came in a box.
With a smile.
Now hobbyists and those needing one-off novelties could get them at a lower price. More importantly, they could find what they wanted, since Radio Shack displays – like those of any notions shop – could be arranged only in a single way that made sense to a small proportion of shoppers, the hobbyists.
Radio Shack never accounted for the competition. Yet it was clear by the mid 1990s their model was doomed – a long, slow death, but unless they could change, there was no way out.
They didn’t change, of course. Adding overpriced phones bought a little time, but no security.
Can law firms be disrupted in the same way?
What is a law firm’s barrier to entry?
What happens if the “unauthorized practice of law” rules are redefined, or bypassed? What happens if clients start demanding serious change – not the fits and starts of the past half dozen years, but real change for 90% of their matters? For corporations, how else might they place everything but the bet-the-business issues requiring high-end specialization? For individuals and small business, how much of the work could go through pseudo-law-firms such as a modified LegalZoom or a law office in Manila or New Delhi with a single representative in Montana or New York?
Before you answer too quickly, recall that Radio Shack swore it couldn’t happen.
But it did.
Are Law Firms in the Notions Business?
That’s a serious question – metaphorical, but serious.
Let me be intentionally provocative:
| Radio Shack | Law Firm | |
|---|---|---|
| What They Sell | A variety of items that were (at the time) hard to find | A variety of services that are (at this time) hard to get elsewhere |
| Price | Expensive | Expensive |
| Overhead | High | High |
| Customer Driver | 1. Need 2. Relationship (weak binding) | 1. Need 2. Relationship (weak binding) |
| Shopping Experience | Disorganized, often requiring sales help | Disorganized, almost always requiring sales help |
| Organizing Principle | Made sense internally, but obscure to most customers | Makes sense internally, but obscure to most clients |
| Growth Opportunity | In 1977, computers… but quickly overwhelmed by other players | ?? (Industry consolidation is not a growth opportunity) |
| Threat | IBM, Apple, Amazon | LegalZoom, “law factories,” in-house changes |
| Threat Response | Awful ads in Thanksgiving Day NFL games | “Unauthorized practice of law” |
| Future | Little to none | TBD |
| “But I need that stuff. Where do I buy it now?” | Amazon (which doesn’t resemble Radio Shack at all) | Perhaps in various places that don’t much resemble today’s firms…? |
I don’t know the answer. I’m an observer, and this is to some extent outside my area of specialization.
But I am an observer of the business world, having run businesses on three continents, and having worked for many years running businesses within a very large and highly profitable multinational corporation.
I believe law is vitally important to civilization, and in a minute I’ll close this article with my favorite quote from A Man for All Seasons, by Robert Bolt. We depend on laws.
What’s not as clear to me is the extent to which we depend on the current organization of the law business.
And I have the same fear as Robert Bolt’s Sir Thomas: If we as a society do not organize the law business to fit the times, who will stand for us should the business be disrupted violently from outside forces?
William Roper: So, now you give the Devil the benefit of law!
Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
Roper: Yes, I’d cut down every law in England to do that!
More: Oh? And when the last law was down, and the Devil turned ’round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man’s laws, not God’s! And if you cut them down, and you’re just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I’d give the Devil benefit of law, for my own safety’s sake!
