What the Future Holds for the Professions
‘The Future of the Professions’ by Richard and Daniel Susskind
Professionals have knowledge, experience, skills and know how that those they help do not.
Shortcomings of the Professions:
- We cannot afford them
- They are often antiquated
- The expertise of the best is enjoyed only by a few
- Their workings are not transparent.
For these reasons the writers suggest that the professions should and will be replaced by feasible alternatives.
Though the working practices of the professions vary and can be quite diverse, they have many features in common; chief being that in analogous ways they all provide solutions to the same problem; that none of us has sufficient knowledge to cope with all of our daily challenges. And so we look to lawyers, doctors, accountants, teachers for expertise that we need to make progress in life.
The legal profession will change more over the next two decades than over the last two centuries, since the time of Dickens. Companies such as BT, AA are beginning to provide legal services. In business law, legal process outsourcing services and networks of freelance lawyers are coming. Companies are responding to cost pressures by establishing a new division of labour: lawyers are breaking down legal work into more basic tasks and finding new ways of outsourcing repetitive, routine work such as documentary review, due diligence work, rudimentary legal research and routine contract drafting. These tasks are being outsourced, off shored, passed on to paralegals, subcontracted and sold to clients on a fixed-price basis.
Technology is playing a significant role in these changes. Legal research tools, back-office systems, document assembly systems are all used by lawyers today but will become available to the lay person tomorrow. In preparation for litigation, intelligent search systems can now outperform junior lawyers and paralegals in reviewing large sets of documents and selecting the most relevant while big-data techniques are underpinning systems that are better than experts at predicting the outcomes of court decisions, from patent disputes to the US Supreme Court.
Similar technologies can assist with due diligence work. E-adjudication sorts out 60 million disagreements that arise amongst Ebay traders each year, three times the number filed in the US court system. Online legal communities mean lawyers do not need to be used as often and when their expertise is sought it is no longer done by word of mouth but by online testimonials. Online auctions for the selection of legal advisers have been in operation for over a decade.
Has changed little in 100 years and may not exist in 50 more. They claim greater intelligence of their team or highlight their proprietary software tools as their USP. In the past spent they 80% of their resources collecting data but now that data is freely available online. If the required information is not available online clients can now turn to research-only organisations like Gartner.
The ease with which companies can now collect their own data lessens the need for external consultants. As a result of these changes many of the bigger consulting firms are off-shoring their research; in some cases up to 1/3 of employees are in cheaper locations such as India. Crowd sourcing platforms such as Open Ideo, Wikistrat and Kagel are another threat. In-house consultants, made possible by the ease of access to information, are increasing in number. There are 50,000 alumni of the big three available to run these teams. Tellingly, the big four accountancy firms do more consulting than the big three consultancy firms. Revenue from consulting services is growing far faster than revenue from audit at the big four accountancy firms.
Tax and Audit
In the past people had two choices when considering their tax returns: they could labour at the task themselves or they could pay a human expert, familiar with the relevant law and practice. Today they can use online tax-preparation software: 48 million people chose this option in the US in 2014.
For large organisations there is an ever-growing suite of technologies to assist them in the completion of their tax returns. There are systems for example to capture the data needed for a tax return, to calculate how much tax is owed, to submit the final returns, to compose formal accounts and reports, and, to forecast the effects of different tax strategies.
For traditional tax practices competition is coming from multiple directions: in-house tax teams, management consultancies, software developers and business information providers are all increasingly interested in conducting tax work. In response, traditional tax practices are focusing less on tax compliance work – preparing and submitting returns – and undertaking more tax planning work, for example, where to locate an HQ or where to be domiciled, to reduce tax liability and tax transaction work; for example, advising on the tax implications of mergers and acquisitions. The advice is increasingly proactive rather than reactive.
The tax profession is said to be at particular risk from technology. Carl Benedict Frey and Michael Osbourne, authors of the ‘Future of Employment’, estimate that only 1% of tax work is safe from computerisation. Of the 700 occupations they review, this is among the ten most at risk. 6.1 billion hours are spent filing taxes every year, equivalent to 3 million people working full time but there is great scope for change.
Leading auditors also say that they are on the brink of fundamental change, but, they observe that their transformation is not coming as quickly as in tax.
However…, much of the conduct of a professional audit is heavily process driven. For decades it has been supported by standard checklists and, in larger firms, by the sophisticated audit methodologies for the fundamental activities – planning, risk assessment, evaluation of controls, testing of transactions and accounting, reporting and so forth.
This is a very brief summary of some of the professions which are considered in ‘The Future of the Professions’ by Richard and Daniel Susskind. It certainly provides some food for thought…