‘Legal Services’ are whatever buyers need to solve business challenges

In ‘Legal Services’ are whatever buyers need to solve business challenges Mark Cohen points out that legacy definitions what constitutes a ‘legal service’, who the client is, and who provides the service constrain our thinking and retard innovation by those invested in traditional paradigms. It’s in the interests of the whole ecosystem that we all revise old thinking (including words and symbols) and adopt new ways to meet the challenges of better, faster, cheaper service to clients and access to justice.

It’s time for a broader definition that recognizes legal service is the integration of practice and the business of delivering professional services not confined to licensed practitioners. Lawyers have a penchant for defining terms. Why then is there no commonly accepted meaning for “legal services?” One reason is that, until relatively recently, legal services were delivered principally by lawyers working at firms. The Cambridge English Dictionary, for example, still defines “legal services” as “work done by a lawyer for a client.” It’s time for a broader definition that recognizes legal service is the integration of practice and the business of delivering professional services not confined to licensed practitioners. This is a paradigm shift from when lawyers practiced and managed the delivery of legal services. Law’s path parallels medicine’s transition from fragmented practice groups to managed healthcare giants.

Law has two components— practice and legal services delivery. The latter leverages differentiated legal expertise and shifts many other former practice activities to other professionals, paraprofessionals, and/or machines. New skills–process and project management, tech expertise, and data analytics, among others, are required. The practice/delivery distinction goes far beyond semantics; it is a reconfiguration of the lawyer role and the structural and economic models from which multidisciplinary, tech and process-enabled expertise are rendered. The transition has debunked two legal myths: (1) lawyers alone are competent to define, engage in, and deliver legal services; and (2) all legal work is bespoke.

Law is experiencing a contraction of “practice,” specialization, the assimilation of other professionals and paraprofessionals, adaptation of technology, scalability, globalization, services-turned-to-products, business discipline, incipient use of data and metrics internally and with consumers, a multidisciplinary approach to consumer challenges, , new delivery models, and customer-centricity. The economic impact of these changes has yet to be fully realized– especially by non-rainmakers at large firms. Lawyers with differentiated expertise, skills, experience, and judgment—like specialist physicians—will continue to command premium fees. Most others will see their pay decline unless they acquire new skillsets and leverage their legal backgrounds in delivery management or in business. Is it any wonder that the profession is resisting change?

Why Is There So Much Confusion About Legal Services?  

The lack of consensus surrounding legal services is emblematic of the uneasy relationship between the profession and the industry. The profession (licensed attorneys) resists change even as legal consumers clamor for it. Legal buyers want “more with less.” That means legal providers must be proactive, predictive, risk-appropriate, transparent, cost-effective, efficient,  collaborative, multidisciplinary, and consumer-centric. That is not the law firm structure, economic model, or modus operandi.

Corporate legal buyers seek holistic solutions to business challenges that raise legal issues. Legal opinions alone do not address the multifaceted risk/reward calculus endemic to complex, rapid-fire contemporary business decisions. The “best legal work product possible” credo of law firms no longer comports with the speed of business or the value-based service demanded by legal buyers. Many in the legal profession believe that migration of “legal” work from firms in-house and to law companies is principally labor arbitrage. Cost is typically an element of the buy decision, but recent studies confirm that expertise, efficiency, and other factors are even more important for sourcing considerations.

These factors explain why a new strain of legal providers is reconfiguring and redefining the Big Law brand of legal services. These providers deploy new tools, processes, expertise, and capital  to reduce cost and provide legal consumers multidisciplinary, rapid, holistic answers to business challenges. Legal delivery is now a three-legged stool supported by legal, technological and process/project management (business) expertise. That means that law is no longer solely delivered by lawyers; it is a team sport that requires their collaboration with other professionals, paraprofessionals, and/or machines. This is an affront to lawyer hubris and the myth of legal exceptionalism. It is also confirmation that legal services are no longer synonymous with lawyers and law firms.

Law firms remain practice-centric. Their failure to integrate practice and delivery expertise has been one of several contributing factors for the steady migration of “legal” work in-house. The delivery expertise void created by firms has also spawned the proliferation and growth of tech and process-enabled, legal service providers. The Big Four and a handful of managed service law companies—notably UnitedLex and Elevate–are transforming “legal services” into something different than what law firms provide. They have a fluid role in the marketplace—alternatively competing and collaborating with firms and, sometimes, in-house departments. They provide a range of solutions tailored to buyer need, not what they sell.

The Thomson Reuters and ALM Reports: Confirmation of A Changing Legal Marketplace

Thomson Reuters conducted the industry’s first in-depth examination of new legal service providers in a 2017 Report.  The study popularized “alternative legal service provider” (ALSP), an omnibus term  for all non-traditional partnership-model law firms that provide “legal services.” Thomson Reuters recently-released its (follow-up) 2019 Report, revealing in the two years since the prior study that ALSP revenue grew from $8.4 to $10.7 billion This represents a compound annual growth rate of 12.9% over that period.. Mari Sako, Professor of Management Studies at Oxford’s Saïd Business School and a Report author explained that “ALSPs are expanding the available range of services by combining talent and technology to deliver legal services in modes that best suit their clients’ needs.” The Big Four and managed services companies like UnitedLex, Thomson Reuters and Elevate are leading the way.

ALM issued a 2018 Report on the Big Four, admonishing law firms that “They’re Better at Meeting the Future Needs of Your Clients.” The Report revealed that PwC earned $500 million from legal services (2016 data), the most among its Big Four peers. This was approximately 15% of what Latham, the top grossing law firm, earned that year. That suggests the Big Four are a long way from supplanting law firms as the dominant market providers. But consider that PwC recently reported 2018 record revenue growth in legal services, registering a whopping 30% increase. The eye-popping growth is attributed to a suite of legal service offerings that include mergers and acquisitions, tax law, global entity management, compliance matters, immigration, and legal tech solutions. It also stems from the launch of PwC’s new Legal Operations and Transformation Services (LOTS) units that assist corporate legal departments to streamline operations via technology, “right-sourcing,” and other legal consulting services available across KPMG’s global network of lawyers.

Both Thomson Reuters and ALM rightly put the Big Four in their own category among legal service providers. Each has a global brand, geographic imprint, deep C-Suite ties, Fortune 1000 client penetration, vast war chests, technological, digital, and process expertise, multidisciplinary workforces, digital transformation expertise, and significant investment in human resources, technology, and ongoing training. The Big Four are all focused on winning more “legal” business from their managed services capability. They are offering an integrated services model that operates at the intersection of tax, finance, consulting, strategy, information technology and project management. This strategy has been clearly articulated  by their leadership. Cornelius Grossman, EY Global Legal Leader, said of the recent Riverview tie-up: “This acquisition underlines the position of EY as a leading disruptor of legal services; it will provide a springboard for current EY legal managed services offerings and bolster the capabilities that we can help deliver for EY clients.” Piet Hein Meeter, his Deloitte counterpart, provided a similar assessment: “We are building capabilities to deliver seamlessly across borders as a truly global legal service provider. The innovative, technology-enabled and integrated nature of our services will disrupt the legal market as a whole.” PwC and KPMG leaders have made similar strategy pronouncements.

The Big Four are by no means alone in their focus on providing managed services. UnitedLex has already pulled off the industry’s largest managed service deal, teaming up with DXC  to “rebadge” hundreds of DXC in-house team members. Bill Deckelman, DXC’s General Counsel hailed the landmark deal as a success, noting it “reduced internal contracting costs by over 35% in the first year and increased speed to final contract.” It has been reported that UnitedLex has several more such blockbuster deals in the pipeline. Elevate can also lay claim to successful managed service capability, and its recent buying spree suggests it is gearing up capacity.

Conclusion

HealthTrust Europe, a subsidiary of Fortune 500 hospital operator HCA Healthcare, recently announced the formation of an ALSP panel to operate alongside its go-to law firms. Dave

Robinson, the Chief Legal and Ethics Officer said:

We want ALSPs to take public bodies on a journey from ‘I have a law firm I like’ to a different stage where we can say ‘what is the art of the possible in legal services in light of the legal technology available now and downstream?’ so they can become more efficient. Ultimately our aim is that there is more money in an NHS provider or a community provider for patient care.

Welcome to a world where legal service is “the art of the possible.” What is that? It’s when providers provide solutions to buyer challenges and exceed their expectations.

Author

Mark Cohen is a lawyer, law professor, legal innovator and strategist, and founder of Legal Mosaic.

Mark says of himself “I write about changes in the global legal marketplace”.

This post was first published by Mark Cohen as A ‘Legal Services’ are whatever buyers need to solve business challenges in Forbes on March 3, 2019.