Law's Emerging Elite: Enterprise Legal Service Providers, Part 2
Updated: Aug 15, 2020
The first article in this three-part series introduced enterprise legal service providers (ELSP’s), proclaiming their entitlement to the “elite” status accorded a cadre of brand-differentiated traditional partnership model firms.
This essay analyzes in greater depth the emergent, transformative, and impactful role that enterprise legal service providers play in the global legal marketplace. ELSP’s are redefining the art of the possible in legal delivery, responding to the unmet needs of the largest, most sophisticated corporate legal consumers in ways that even elite firms cannot deliver.
ELSP’s Respond To The Challenges Confronting General Counsel
General Counsel confront a battery of challenges: escalating management demands to operate with the same efficiency, speed, and value enhancement as the enterprise; simultaneously serve as enterprise defender and business partner; manage existing and new risks; and navigate the speed and complexity of global business. This includes responsibility for regulatory, data management, cybersecurity, brand protection, and other risk factors. GC’s must do all this with flat or declining budgets. They must also be prepared to support digital transformation, a pan-industry C-Suite priority.
It is precisely because of these demands that a handful of enterprise legal service providers are emerging as law’s new elite. ELSP’s collaborate with general counsel and their teams to reimagine and reform every aspect of what legal services are and how they are delivered. This process starts with an in-depth, no-holds-barred audit of existing internal and outsourced resources and infrastructure. This involves a comprehensive process analysis of optimization, reengineering existing operating models, reformulation of existing Law Department metrics, and other key operational elements. The GC’s risk tolerance, corporate objectives, and existing resources are examined; there is no preconceived end-game or one-size-fits-all solution. ELSP’s arsenal of domain experts includes sophisticated consultants that lead this effort. They collaborate with GC’s and instill confidence to create a vision, make it tangible, then execute it with quantifiable, enterprise-impacting results.
ELSP’s journey with GC’s to reimagine their entire way of delivering legal services. Together they uncover where the new frontiers of value reside. This process is emblematic of “going digital.” ELSP’s collaborate with GC’s and their teams to uncover new ways to improve how the enterprise—not just the legal function—conducts its business. This is both a cultural transformation as well as a reshuffling of the division of labor. Technology, of course, plays a critical role in the process. ELSP’s work with GC’s to decouple legacy IT systems that perform critical functions inefficiently. They are replaced by platforms—often client-facing— that connect people, devices, and objects. This enables the legal function—and the entire enterprise-- to drive value in new ways; promote efficiency; harness technology to mine data, refine process and support training; and move with the speed required to capitalize on opportunity.
ELSP’s earn their “enterprise” moniker for two key reasons: (1) they provide comprehensive solutions—not spot services—that enable a complete reconfiguration of the legal function; and (2) the solutions they design and execute on impact not only the legal realm but also the entire enterprise. ELSP’s are designed to improve business and, necessarily, to realign the legal function. They are “alternative providers” not because they are marginal but because they are a consumer-centric alternative to traditional legal delivery that better serves legal consumers in today’s marketplace.
Depth and Breadth of Domain Expertise
Enterprise legal service providers have built their structures, economic models, platforms, infrastructures, access to capital, and agile workforces from the consumer perspective. This is not a catch-phrase as it has come to be on websites and in legal tabloids. ELSP’s were designed to respond to the most pressing, unaddressed legal function use-cases. That is why ELSP’s have a deep, agile pool of domain expertise in commercial contracting, intellectual property, data management associated with litigation, investigations, compliance, and risk management. These areas constitute the vast majority of legal spend. ELSP’s operations in numerous major business centers around the world are staffed by domain experts in the global regulatory landscape. This ensures smooth, timely execution and is a key component in ELSP’s ability to handle enormous, complex matters for the world’s largest corporations. Size, breadth and depth of expertise, capital, a global footprint, technology platforms, constant improvement, and lifelong learning all matter. This is true customer-centricity. It is also an outstanding opportunity for legal professionals to leverage their skills—and acquire new ones—in a dynamic environment. ELSP’s are legal delivery’s future.
ELSP’s increased efficiency, automation, and data analytics create new levels of collaboration and business agility that impact the enterprise’s success, extending far beyond the traditional legal function. ELSP’s eliminate the practice/delivery schism, collaborating with GC’s to create a delivery model tailored to the culture, organization, resources, and risk profile of the enterprise.
Enterprise legal service providers optimize the value of individuals and teams, ensuring that the right resource is assigned to the appropriate task. This goes far beyond labor arbitrage and collaboration of humans with machines. It involves extracting maximum value from each team member by liberating lawyers to optimize their roles as legal defenders and business partners. This is essential in the age of digital transformation that demands agile, integrated workforces that operate across legacy silos to forge holistic solutions to complex business challenges.
Enterprise legal providers deploy a digital platform where contracts are articulated as data-not documents-and that is fully integrated with the business processes it supports. This not only significantly reduces legal spend, but it also shortens sales cycles and provides critical, actionable intelligence to business units. They also provide a global infrastructure that supports and executes the GC’s vision. ELSP’s use their substantial access to capital to shift risk from the GC to the ELSP. Each of these components is integral to the integrated, holistic solutions that ELSP’s tailor to a client’s particular use-case, culture, risk tolerance, and needs.
There are several components required to deliver enterprise legal services. They include: (1) multidisciplinary expertise, a global footprint, and the depth and breadth to drive impact to even the largest companies; (2) significant capital investment and general financial strength to enable shared risk and reward; (3) sophisticated consulting; (4) the ability to stratify and segment legal work to ensure that the appropriate resource is utilized; (5) technological and process solutions that drive efficiency and business analytics; (6) integrated, end-to-end solutions, not just point solutions; and (7) a demonstrated ability to drive impactful results that expand the traditional legal function and create enterprise impact. Organizations claiming an ability to deliver enterprise legal solutions should be evaluated in light of their ability to demonstrate these capabilities.
ELSP’s are built for the digital age. They provide customized, “one-stop-shop” solutions that reconfigure the role, impact, and economics of the legal function. They replace a siloed, segmented, inefficient, costly, labor-intensive, bottom-line-drag with a proactive, productive, data-mining, integrated enterprise partner that retains its historic “enterprise defender” role.
ELSP’s Are Legal Delivery’s Digital Shepherds
ELSP’s are the vanguard of legal delivery’s next phase, creating an expanded role—and impact—of legal services, and its alignment to and collaboration with the enterprises it serves. Enterprise legal service providers are law’s digital transformation shepherds, guiding the industry into the age of data, agile workforces, constant learning, and customer-centricity by creating new, impactful delivery models that transcend the boundaries of the traditional legal function. ELSP’s are emblematic of law’s transition from a vertical to a horizontal that is integrated with and positively impacts the entire enterprise. It is replacing the legal guild with a legal service delivery model designed for the digital age.
The recent announcement by Ernst & Young (EY) that it was acquiring Pangea3, the Thomson Reuters managed service arm, has created an enormous buzz throughout the legal industry. This echoes EY’s acquisition of Riverview and mirrors the rapacious expansion of Deloitte, PwC, and KPMG into the legal space. There is a growing sense that the industry is finally changing and that legal consumers are looking beyond law firms for solutions.
There is a distinction to be drawn between consolidation and innovation. For example, EY’s purchase of Pangea3 fortifies its depth to conduct certain high- volume tasks, but it should not be mistaken for enhancing ELS capability. Enterprise legal services is, by nature, sophisticated, high-value, and different from traditional managed service offerings. This series is intended to highlight the unique, integrated, and game-changing aspects of ELS and the high-bar to an organization’s capacity to provide it.
A handful of enterprise legal service providers have followed different paths to develop their capability to transform legal delivery by offering legal buyers fresh, paradigm-changing, and impactful solutions. Who they are and how they have evolved will be examined in the third and final article in this series.
About Mark A. Cohen