This guest post is by Eric Griffin, a director at Counsel On Call. Eric works closely with clients to design innovative and cost-effective legal solutions in a variety of verticals and practice areas.
Just over a week ago, Ryan McClead of 3 Geeks and a Law Blog penned a great conversation starter titled “The Myth of Disruptive Technology” in the legal industry. There, he analyzed the fabled competitive battle between the innovative, streaming video of Netflix and the plodding retail video store Blockbuster, and compared it to the situation in today’s legal industry. Although McClead questioned the applicability of the Netflix/Blockbuster paradigm to law practice, he implied that many traditional law firms may be in the same boat as Blockbuster: unable to adapt to a rapidly changing market environment without cannibalizing its core business.
Soon the interwebs were buzzing with arguments surrounding McClead’s implication. People questioned if we are actually living through the legal innovative disruption, or if law practice was even capable of being disrupted. Does it need to be?
As a lawyer who spent most of his career in-house (including time as a GC) rather than in a law firm, my perspective may be different from my law firm colleagues. My sense is serious disruption is already underway for law practice.
In his article, Sam Glover from Lawyerist writes that law practice is resistant to disruption, mainly because law practice is a regulated industry where licensed attorneys have something of a monopoly. But ultimately, I think the monopoly of lawyers is going to prove a pretty slender reed to hold back the tides of change. OK, I just mixed my metaphors but I think you get it.
Although lawyers do (for the moment) have “something of a monopoly” on the delivery of legal services, it is far from a complete monopoly. First, it is almost impossible to come up with a consistent, workable definition for what the “practice of law” even means. This alone causes a lot of leakage around the perimeters of the profession. In a world where LegalZoom offers sophisticated legal forms and Big 4 accounting firms routinely offer “consulting” services that look a lot like traditional legal services, you don’t have to be a weatherman to see which way the wind is blowing.
I am skeptical that lawyers can maintain their monopoly for too much longer. These barriers are already crashing down in the U.K. and other European countries, and it won’t be long before pressures to make similar changes arrive in the U.S. (some already have).
The rationale for the regulation of law practice is really premised on the presumed asymmetry of information between the lawyer and the client, and the requirement that only licensed attorneys can practice law is intended to protect the uninformed client from the unscrupulous. Now, the availability of statutes, case law and other forms of legal information are at everyone’s fingertips, strongly negating any informational asymmetries.
But Glover is correct that the disruption in the delivery of legal services likely won’t arrive as breaking news, but as more of a developing story. He notes that the lower end of the legal services market will be increasingly taken over by automated document services, para-, and even non-professionals. At the same time, corporate legal departments, which are under pressure as never before to trim costs and drive efficiencies, are leaving no stone unturned in their quest to remake the middle and upper end of the market.
One way I see legal departments doing this is by requiring their firms to disaggregate processes and deliverables, and insisting that the firm move the various discrete aspects of the work to the provider most capable of delivering value, whether inside or outside the firm.
This will prove a tough transition for many incumbent law firms, which are wedded by resource, process and cultural values (not to mention financial margins) to keep as much work as possible inside the firm. Also, these forces will affect different practice groups within the firms unequally, so the pace of practice group departures and spin-offs will likely increase.
Legal departments are also disaggregating their internal workflow and right-sourcing tasks and processes that frequently bog down their in-house lawyers. This has at least three positive effects:
- It drives efficiencies and process improvements because the provider is constantly measuring, analyzing and reporting against predefined metrics
- It allows the company to have routine legal work handled by providers that perform the work at a lower cost
- It frees up internal legal resources to handle higher value, more client-facing and preventive legal work
This conversation is why I came to Counsel On Call. We're at the crux of these decisions, these tipping points, these market shakers. Some call it disruptive, but we like to think of it as "integrative" law – collaborating with both inside and outside counsel to determine the best solution in both the short and long term on a wide variety of legal matters. That's the real future we're talking about.
General Counsel are holding the remote control in showing us this innovative disruption. The question is, are they watching the broadcast?