The New Delivery Paradigm and Tools of The Legal Trade
Until recently, lawyers needed just a few tools to ply their trade—legal knowledge, licensure, and clients. Good ones had a fuller kit—specialized skills and/or expertise, oratorical and writing proficiency, and a combination of intellectual and people smarts that elevated their client standing from lawyer to trusted adviser.
Lawyers today practice in a marketplace where licensure and ‘knowing the law’—without more-- won’t get them very far. A book of business is as important as ever, but maintaining it is another story. Rainmakers must do more than schmooze client prospects and/or position themselves to ‘inherit’ clients from retiring partners. The legal buy-sell dynamic has changed markedly during the last decade. In Facebook terms, it has morphed from ‘in a relationship’ to ‘it’s complicated.’ A quick look in the rearview mirror helps explain the client attitudinal shift and provides context for the evolution of legal delivery and the new tools of the trade.
Three Stages of Market Transition
The practice of law was once synonymous with the delivery of legal services. Lawyers were the sole providers, and they wrote rules proscribing by whom and how legal work was delivered. Law firms were the only game in town; clients had no options—apart from the friendly rivalry among firms whose ‘code’ prohibited partner poaching. The guild’s collegiality persisted until the mid- 1980’s when three events heralded law’s transition from clubby practice to cut-throat business.
The first change phase involved law firms. Finley Kumble shocked the legal world by offering huge signing bonuses and eye-popping guaranteed contracts to entice rainmaker partners to join them. 'The Finley Man' ushered in law's era of free agency and created the model for the modern firm. At about this time, the American Lawyer introduced its ‘AmLaw 200’ list, publicizing law firm financial information—notably profit-per-partner (PPP). The AmLaw survey highlighted financial differences between firms and quickly became—and has remained-- the law firm metric and as well as a catalyst for mergers and laterals. This coincided with Ben Heineman’s departure from BigLaw to head up GE’s legal department-- another watershed. Heineman elevated the status of corporate counsel and laid the foundation for enhanced in-house capability, influence, and financial reward. It was suddenly acceptable for a premier lawyer to work in-house.
The second phase of marketplace change occurred around the turn of the millennium when, as Tom Friedman noted, the world had become flat. Legal process outsourcing (LPO’s) and staffing companies--a precursor to the ‘gig economy’—emerged. Their model was initially premised on labor arbitrage—deploying less expensive labor sources to perform repetitive tasks. The disaggregation of legal tasks—peeling them away from law firms that had previously handled cases from start to finish—had begun. It was only a matter of time before disaggregation migrated up the complexity chain by combining labor arbitrage with technology. The urban myth that ‘law firms must perform all legal services’ was debunked, and this ignited investment in technology, process, and new delivery models.
The global financial crisis of 2008 produced law’s third phase of transition. Labor arbitrage was coupled with advanced technology and process management to create a more efficient, cost-effective way to deliver repetitive ‘legal’ tasks as well as more complex ones. This was accompanied by a shift in resource deployment; ‘gigs’ became an alternative structural and delivery option to ‘jobs.’ A handful of legal service providers—including in-house departments-- invested heavily in technology to routinize tasks and to integrate with the client’s operation . The new delivery paradigm was not simply designed to reduce cost; it was a fundamental reorganization of legal delivery. This had many salutary benefits for consumers including: compressing delivery time, mitigating risk, standardizing processes, and better aligning legal operations with the client enterprise. This new legal delivery model—a response to traditional partnership firm stasis—is designed to provide solutions to business challenges, not ‘legal problems.’
Legal consumers still pay a premium for legal talent with specialized legal skills and expertise--trial work and representation before tribunals, large commercial transactions, complex regulatory matters, etc. The law firm mantra that ‘all our work is bespoke’ has ceded market share to new providers, an agile workforce, a legal supply chain, and an increasingly demanding consumer that has multiple options to handle the bulk of ‘legal work.’ Law firms are no longer the presumptive end-to-end provider. The ACC’s ‘Value Challenge,’ launched around the time of the financial crisis, was a consumer-based exhortation to law firms to upgrade their delivery capability and provide enhanced value. Almost a decade after the financial crisis, most law firms have failed to meld legal with technological and process capability. Their ‘brute force’ method of service delivery remains, and the ‘tweaks’ they have made are reactive, not systemic. Discounts, caps, and other ‘alternative’ fee arrangements offered by firms—at the insistence of clients-- are palliatives, not cures, for the roots of client dissatisfaction.
Successful legal providers—elite corporate legal departments and a handful of service providers-- have responded to the Value Challenge. They take an inter-disciplinary, managed services approach to legal delivery. For them, the boundaries between ‘legal’ and ‘business’ challenges are no longer meaningful. They meld legal, technological and process expertise and seamlessly integrate ‘practice’ elements with legal operations. In their model, legal delivery is not simply about lawyers anymore. It is a tightly-knit weave of leveraged legal talent, technology, process management, and supply chain resources aligned with the client. It is a delivery paradigm that requires new tools and a reorientation of the delivery of labor that shifts tasks to the appropriate resource—human or machine. In time, corporate legal departments--will will replace traditional partnership firms with 'safe' scalable delivery alternatives that merge elite 'practice skills' into the managed service model.
New Tools in Legal Delivery and a Client Focus
The recent emergence of ‘legal operations’ (a/k/a ‘legal ops’) as a core delivery component is emblematic of law’s transition from practice to business. The Corporate Legal Operations Consortium (CLOC) and The Association of Corporate Counsel Legal Operations (ACC Legal Ops) are two industry groups bringing ‘legal ops’ front and center. Last month, CLOC held its annual conference in Las Vegas, drawing approximately one thousand people—testimony to the standing legal ops now enjoys. CLOC defines ‘legal operations’ as ‘a multi-disciplinary function that optimizes legal services delivery.’ It identifies twelve core competencies that legal ops draws from: Strategic Planning, Financial Management, Vendor Management, Data Analytics, Technology Support, Legal Support Models, Knowledge Management, Professional Development and Team Building, Communications, Global Data Governance/ Records Management, Litigation Support, and Cross-Functional Alignment. These are law’s new tools of the trade on the business side of legal delivery.
There are also new tools on the legal practice side, too. They include: understanding technology’s role in practice/delivery (a professional competency element in many states); project management; business basics; collaboration; client skills; social media and its intersection with law; cybersecurity; cultural awareness; marketplace awareness, including regulatory impact on delivery models and ethics; and the interplay of practice and operations in legal delivery. Individuals utilizing these tools will be well-suited to solve client challenges. And those that combine practice and operations skills will be in the vanguard of legal delivery’s future.
Legal delivery is no longer focused on lawyers (providers); it is now about clients. Specifically, the objectives are how to deliver a new level of client service that makes legal services easier to acquire; accessible on a 24/7/365 basis from anywhere in the world; customized to address specific challenges; cost-effective; metric driven; predictive; collaborative; proactive in identifying client risk and capable of solving client challenges when they arise; and acting as a business partner with the client to capture opportunities. The new tools--and those that use them--will also provide a solution to the access to justice crisis by making legal services accessible, affordable, and efficient to tens of millions in need of them. This is critical in preserving the rule of law, restoring societal confidence in the legal process-- and lawyers, and ensuring the legal profession serves society consistent with its mission.
A 2016 study by Deloitte predicted that approximately 114,000 legal jobs will be automated within the next two decades. This is not ‘future shock;’ nearly 31,000 legal jobs have already been eliminated by technology. What the numbers do not reflect, however, is the new jobs that will be created as law morphs from a labor-intensive delivery system controlled by lawyers to a tech and process driven one. Legal service workers will use new tools in those as-yet unidentified positions. Providers with corporate structures whose mission is to drive business impact that exceed customer expectations will be law's dominant delivery sources.