Many sectors and types of firm are at risk of disruption from digital business models and services, and their organisational structures and practices face a myriad of challenges rooted in new technologies and the ways of working they make possible.

Professional services such as accounting, law and consulting are an area where firms have continued to enjoy great success over the years despite very re-invention of the basic business model and ways of working, which can be traced back to medieval times in some cases. But even in the hallowed halls of the oldest professional services firms, there is a sense that real change is coming, and a growing interest in how Digital Transformation might play out. I began working with professional services firms to introduce social and collaboration tools around a decade ago, and since then, it has been fascinating to watch the slow pace of change, and to consider the reasons for this inertia. These are fascinating firms, engaging in pure knowledge work and populated by some very smart people, and yet anchored to methods and social structures that go back hundreds of years. At Postshift, we are working on several projects that are concerned with the future shape and structure of professional services firms, and the more we delve into the topic, the more we become interested in the sector’s potential to benefit from precisely the changes it seems to fear.

Last week, the law firm Allen & Overy hosted a lecture by Richard Susskind and his son Daniel about the future of the professions and, in particular, the potential impact of artificial intelligence and automation. Susskind has been writing about the impact of technology on law since the 1980’s, and told the story of how his 1996 prediction that email would become the dominant communication medium in the legal sector was regarded as crazy at the time, illustrating just how slow the sector has been to embrace change.

Why do Professional Services exist?

Professions exist, says Susskind, because society cannot know everything and therefore needs specialists with ‘practical expertise’ to help us; and, in return for being given social status as gatekeepers, these people uphold professional values and provide services to those who need (and can afford) them – a kind of grand bargain. But technology is changing the game in important ways. Online learning site  Khan Academy has 10m uniques users per month; medical advice site WebMD has 190m uniques and auction site Ebay resolves 60m legal disputes per year using online software – more than the total number of matters in the entire England and Wales legal system. Even the Vatican has a confession app.

Professional services have been on a journey in recent years from pure craft to standardisation and then systematisation, which has seen large firms apply centralised corporate IT and process management to the practice of law, accounting and other professional services. Now, Susskind argues, they face a fork in the road that he dubs ‘externalisation’, which means professional services can be delivered equally well through commons production or free online platforms as they can through fee-based services. Notably, whilst we have more and more online social networks for professionals, we are also seeing the emergence of social networks for customers as well, with peer-to-peer advice and crowdsourcing beginning to challenge the traditional and expensive ‘craft’ that the sector is built upon. These and other challenges such as better informed and organised clients, join a growing list of reasons why managing partners may not be sleeping very well, even as the top tier of fees pass £1,000 per hour for some firms.

Perhaps the biggest impact will come not just from new ways of organising and delivering professional services, but also the very nature of the ‘practical expertise’ that professionals deliver. Exponential growth in computing power allied with increasingly sophisticated approaches to artificial intelligence mean that systems like IBM’s Watson can potentially do the hard work of reading and analysing vast amounts of legal opinion or medical research. It used to be thought that artificial intelligence is no substitute for judgement, says Susskind, but in fact judgement is a response to uncertainty, and reducing uncertainty is something machines are very good at.

The FT’s Andrew Hill picked up on one of the implications of this for professionals (“Robots will force experts to find other routes to the top”) that Susskind mentioned in the lecture: how can people build expertise to become experienced professionals if the machines take over the basic leg work that people used to do on their way up the career ladder? Professions may claim that they do not do routine, repeatable tasks today, but in fact when you unbundle the work they do, it is clear that much of what they do is indeed routine – no bad thing if you are learning the ropes – and therefore ripe for automation or optimisation.

The future Susskind describes is one where traditional professional services continue to exist and enjoy the benefits of technology optimisation and efficiencies, but are eventually displaced by that technology, ultimately leading to the dismantling of the professions. However, he also provides a glimmer of hope, suggesting that new roles will emerge that use the professionals’ experience and judgement in a different way, but supported by the analytical power of machines in the background. Although he cautions against the ‘lump of labour fallacy’ (the amount of labour we nee is not fixed) and makes clear that new jobs and roles will emerge thanks to technology changes whilst others are destroyed, Susskind is convinced the professions will eventually be dismantled, at least in the sense we know them today.

Accounting for change

It is not only lawyers who face disintermediation at the hands of technology. Accounting and the accounting profession face similar changes at the hands of new technology, new platforms and services, plus changing customer expectations.

As the FT reported recently, the big four accounting firms are pushing deeper into consulting (and also law, interestingly) as their core audit market sees signs of turbulence, with increasing price pressure and a growing readiness to look beyond the usual suspects for this kind of work. Audit is an interesting example of an activity that is crying out to be disrupted, given that it applies a manual static sampling approach to flows of (almost totally digital) data. The Accounting professional body in England and Wales (ICAEW) runs a very interesting Audit Futures project, and I have been impressed by some of the innovative service design ideas and new ways of thinking about the audit process that it has generated. I also took part in the panel discussion the project organised at the World Forum of Accountants in 2014, which was a thoroughly enjoyable encounter with a diverse international audience:

With so many new online accounting platforms emerging, some of which have substantial online communities to support them (Susskind mentions that over 48m US citizens submit tax returns using TurboTax supported by a huge community of people who can give advice), and with more and more ways for firms to make sense of their own financial data, there are clearly a number of challenges to the accounting profession. What can accountants draw on from within their long history as trusted advisers that will continue to create value for themselves and their clients in a business environment where financial and other data is easier to access and analyse?

Like lawyers, accountants have a professional culture that got back a long way, and in some ways is more suited to the digital economy than that of the corporate structures the larger firms have created around them. Lawyers and accountants have typically been individuals of good repute who operate through networks of trust to provide their ‘practical expertise’ where it is needed, but all the while upholding professional standards in a way that contributes to the maintenance of reliable and trustworthy business and legal environments. These professional characteristics are arguably a great match for the culture of ‘networked individualism’ that underpins the digital economy.

What about automation and losing jobs to Watson and other AI technology?

In the case of both legal and accounting, there is so much scope for more efficient use of expensive adviser time that there is plenty of slack for technology to pick up before real change begins. If clients can get the same or better outcomes for less money and advisers can cover more matters at the same time, the overall scope for revenue may remain unchanged. Later, instead of armies of associates and support staff, the bottom of the professional services pyramid will probably contract as technology replaces much of the drudge work of discovery, analysis and the collation of information. But even further into the future, I think there is a case to be made that clients want trusted, human advisers who can lead them through the undergrowth of complex legal or accounting needs whilst adding their wisdom and experience to the output of the machines or AI that does the leg work. In this respect, I would make a comparison with hotels. So many things can be automated, but people trust people and, on the whole, prefer personal service, especially at the high end. Technology in the background; people as the front end.

At the low end, we will surely see the rise of self-service platforms, perhaps in some cases tapping directly into flows of client data for accounting and audit, and this will open up a lot of competitive innovation as clients realise they can shape the offering provided by professionals, rather than just accept the customary service. But at the higher end, there is a good chance that small teams of entrepreneurial professionals who know how to get the most out of their AI systems will be able to handle large and complex transactions or matters for their clients.

Future of the Professional Services Firm?

Whilst it is reasonably straightforward to think of positive futures for professionals, the question of what this means for the firm is a slightly different one. Where firms can aggregate analytical power and develop a platform to extend their value proposition both internally and externally, or develop compelling brands and service delivery models that clients trust, then there remains a strong case to be made for their continued existence. But it is unlikely that they will continue with the current model or way of working, which does not add sufficient value to the work of individual professionals, except perhaps in the most complex of matters where co-ordination of various internal disciplines is needed.

Will they look more like (software) platform companies than auditors? Will they look more like networks? Will they flex their shape and scope in response to changing client needs, pulling in semi-autonomous people and teams as needed? Also, what will society demand of their role, and what expectations will potential employees have for them? There are many questions about how the firm of the future will look, and we are delighted to be undertaking a research project in conjunction with ICAEW and its Audit Futures programme to try to map out the contours of a future firm based on what we know today. We are putting together a multi-dimensional model of the various aspects of the firm that we think might change, and then asking accounting professionals to give us their views, review and ranks the dimensions of the future firm and share insights into how they think it might work. We will also be organising a series of roundtable seasons with professional firms to discuss the issues arising in more detail.

You can find out more about the project here: and if you would like to know more about Postshift’s work with professional services firms more broadly, please feel free to visit our website or get in touch with me directly.