Remaking the law firm ecosystem

As much as talk in legal and broader commerce overall these days centres on David v. Goliath or even the clash of the titans (think BigLaw), there’s a very faulty set of assumptions around this type of thinking. Taking the view that it’s us versus them unduly limits the possibilities not just for better delivery of current services but also the creation of new forms of value in the best interests of the ultimate client. An ecosystem approach with some level of coordination among many contributors provides the best and most interesting outcomes. It’s also a key driver of innovation.

Many readers are probably not blogosphere/Twitterverse addicts and perhaps discover trends and consume ideas in the market by reading print, word of mouth, or their experience. That’s so adorable! You can’t lay claim to common sense if you are not attempting to view the broadest context possible. Separating signal from noise is a challenge, but that doesn’t mean you should cease questioning assumptions and even your experience.

Although it’s not particularly well known in Canada yet, the growing and likely to be dominant Corporate Legal Operations Consortium is setting an agenda based on the concept of a legal services ecosystem. The stated mission according to its website is: “To help legal operations professionals and other core corporate legal industry players (e.g. tech providers, law firms, LPOs, law schools, etc.) optimize the legal service delivery models needed to support the needs of small, medium, and large legal departments.” There are other associations, and they are quite good, but, curiously, they insist that individual members must be lawyers — even if they are part of an in-house department. 

Increasingly, in the commercial context, lawyers are not the straw that stirs the drink. They are but one feature in a broader supply chain and as solutions become mostly technology or process driven, the best outcomes are going to be achieved by cross-disciplinary approaches.

Richard Susskind doesn’t have the monopoly on the idea but has articulated it best and often that the law does not exist to provide a living for lawyers.

If you’re selling something, anything, why wouldn’t you focus first and foremost on those that provide you with the revenue to pay your bills? Somehow, this fundamental precept has been missed by traditional providers of legal services who service clients well, even when the ladder is leaning against the wrong house.

Of all the data that might interest smart clients, lawyer and law firm rankings and ratings do not make the cut. Clients are more concerned with managing their budget, which doesn’t necessarily mean cutting costs, but at least controlling spend with a level of transparency and quantifiable efficiency gains. They use metrics, dashboards, and tools to optimize their spend and nowhere in that calculus are they required exclusively to utilize lawyers or law firms for the management of contracts, content, IP, compliance, data, records, e-signature, policies, process, and especially knowledge.

When it comes to innovation, while slow in uptake, there is still a laudable attempt being made by many law firms. Regrettably, there is also a fair amount of dubious marketing of those efforts whether the results are real or merely aspirational. So how to measure successful innovation? Consider that Deloitte aims to have 30 percent of revenue from services that weren’t being executed in the prior two years. It’s a bold target that drives a run rate of between 24 and 28 percent. It’s also a measure that is a win for clients and the firm. It’s not merely unbundling of current services and then charging for the disparate parts, it’s creation of new value that needs not be rooted in pure accounting and financial advisory. Further, those results can only be achieved by leveraging an ecosystem of players.

Remaking the law firm ecosystem

In their recently released book Remaking Law Firms, authors George Beaton and Imme Kaschner provide a compelling and empirically researched global snapshot on the challenges and opportunities facing large law firms in transition. Among the prevailing themes is the idea that remaking law firms will require greater reverence and respect for law firm personnel who aren’t equity or income partner lawyers. They aren’t lawyers at all! They’re increasingly projecting managers, technologists, and process professionals who are getting the bulk of the air time in client pitches rather than the lead lawyers.

That’s an internal ecosystem, and it’s driven by the client.

Do we believe law firms will compensate these valuable contributions on par with equity partners?

While law firms can and will be remade to varying degrees, the external ecosystem is going to accelerate more nimbly and with greater velocity. The professionals who make up the increasingly valuable roles inside law firms will also join legal service providers as well as the vast number of consultancies, agencies, and technology players, both established and in the startup space. All of these players work collaboratively and often in concert on behalf of the same client engagement — while at other times competing against each other. Similarly, because of client demands, they will also work with law firms on delivery, but also, on occasion, in competition for certain aspects of work.

For those professionals who are not lawyers, there is a wealth of opportunity in the broader ecosystem to pursue fulfilling work without a lot of the tar of law firm culture slowing things down. They can choose to still be in the legal services industry without being housed in the glass tower and marble tables of a law firm. In fact, they can serve legal and other industries at the same time.

If I’m an IT, process, or other domain expertise professional, I’ve got more meaningful (and lucrative) things to do than teach lawyers how to best manage e-mail on behalf of my law firm employer.

It’s this wealth of opportunity to service law firms, in-house departments, and other legal consumers from the outside that is encouraging and empowering for other members of the ecosystem along with the ability to service and partner with a global rather than regional market. Indeed, the burgeoning ecosystem possibilities are what has fuelled the activities of LegalX, including its upcoming collaboration with the Canadian Bar Association at its annual conference in Ottawa in August.

Five early-stage legal technology startups will get a chance in August to participate in The Pitch, the first-ever legal innovation startup competition where five finalists will be guaranteed an interview with the Chinese Angels Mentor Program where, if selected (and pending due diligence), they will receive an equity investment of no less than $200,000. It also comes with a residency at LegalX (virtual or otherwise), which vaults companies into the ecosystem of makers and users, both big and small, within the legal ecosystem.

Knowledge, experience, skills, infrastructure, and especially ethics are not the exclusive domain of lawyers, and neither is the provision of all the necessary services that make up the ecosystem.

Much of the “knowledge” of lawyers can be acquired and accessed by many other means. The only thing over which a law firm has an entrenched monopoly are those aspects of risk and “assurances” to the client that there are disciplinary consequences for a firm or lawyer’s negligence or malpractice.

Even then, regulators struggle to police the most egregious scallywags like Javad Heydary, who carried on practice for years in the Ontario market without repercussions. The only thing more mysterious than the inability to discipline Heydary after years of abuse was his ultimate death and the regulators’ further inability to confirm he had passed, notwithstanding having access to the caput mortuum.

Competition is relevant and will continue to be, just as law firms are relevant and will continue to be.

However, the best products and services that are both innovative and market connected are clearly going to be the result of collaborative forces in a broader ecosystem rather than the historic Coke v. Pepsi battle for the taste buds. It’s not the end of lawyers or law firms, but a reshuffling of their importance in the broader value chain.

Authors

Jason Moyse is industry lead of LegalX and manager of legal business services at Elevate Services
serving global law firms and corporate legal departments.

and

Aron Solomon is the head of LegalX and a senior adviser at MaRS Discovery District in Toronto. 

 

‘Remaking the law firm ecosystem‘ first appeared in Canadian Lawyer on 4 July 2016, and is re-posted on Dialogue with the permission of the authors and Canadian Lawyers, to whom we are most grateful.