Signs of the times: The rise of managed legal services

This month I am delighted to welcome Catherine J. (CJ) Moynihan as a contributor to Dialogue. As a senior director of legal management services at the Association of Corporate Counsel,  she is the subject matter expert on managing the legal function, legal spending, and the ACC Value Challenge. Catherine has many and special perspectives on changes in the legal services supply chain, especially those being driven by clients.

During June this year, a handful of conversations got me thinking about the trajectory of managed legal services, namely the providers of an integrated combination of consulting, technology, and talent solutions. Roughly a decade along in its evolution, this category of legal service providers (which includes Axiom, Consilio, Elevate Services, Integreon, QuisLex, and UnitedLex), provides hands-on support to general counsel facing operational challenges, often helping transform key pieces of legal service delivery. 

The first conversation occurred at the annual ACC Legal Operations Conference. There, I asked a seasoned corporate legal ops professional about how she was faring with a new general counsel, and she mentioned that she is becoming restive. When I mentioned that UnitedLex has been on a binge of hiring and placing legal ops pros, another in our group piped up, “Hey, I was just trying to recruit her to join Elevate!” A few days later, I was catching up with Stephanie Corey, who co-founded UpLevelOps less than a year ago, and she cheerfully shared that the only challenge is meeting demand. Soon thereafter, a legal process outsourcing provider was telling me that his organization is providing more consulting and technology solutions, and he mentioned, “we are considering re-branding as a managed legal services firm.” Finally, at the end of the month, I had lunch with Mark Cohen, formerly leader of Clearspire, an alternative business model law firm. (Editor: Mark is a prolific contributor to Dialogue.)

The arc of the story (so far) is clear. Reacting to runaway external legal spending, sophisticated corporate legal departments began disaggregating legal work, in-sourcing some, assigning other slices to legal process outsourcers or approved (often e-discovery) vendors. To better control the cost of work still being assigned to law firms, these legal departments also converged to smaller panels of law firms and began converting to value-based fees.

The rise of managed legal services

Of course, labor arbitrage is not enough nor is it sustainable, so with pressure on to deliver legal services better, faster, and cheaper — especially when it is being performed in-house — legal departments have increasingly employed legal operations professionals and hired managed legal services (MLS) providers to optimize how people, processes, and technologies are deployed to improve quality and efficiency.

Often, legal ops pros collaborate with MLS partners on strategic and operational projects, and the managed legal services providers can be deployed flexibly, becoming an extension of the legal department where needed. With an ever-widening swath of capabilities and talent that can be deployed across clients, MLS providers help keep the swings of the pendulum between in-sourcing and out-sourcing a little narrower.

Yes, the series of conversations I have mentioned are signs that veteran corporate legal operations professionals are a hot commodity, and the managed legal service providers that they often partner with are growing rapidly. However, it was the conversation with Mark that helped me understand what the signs are really indicating. Mark co-founded Clearspire in 2008, a virtual law firm built on an innovative technology platform that eschewed hourly-based fees – and an early exemplar of a NewLaw firm (1). As the standard-bearer for the ACC Value Challenge, I was rooting for them. When Clearspire folded, I shared his disappointment that general counsel were admiring — but not sufficiently buying — Clearspire’s services. Mark went on to build Legal Mosaic, a platform for writing, speaking, and teaching globally. But he clearly wasn’t done yet in his quest to help bend the trajectory of the evolution of legal services. He underwent many rounds of discussions about joining one of the “big four” accounting firms, and ultimately turned down the opportunity. Now, he is Chairman Of the Board of Advisors and Chief Strategy Officer of Elevate Services.

Converging circles in the Venn diagram

There is a clear and growing overlap of the circles in the Venn diagram encompassing BigLaw (2) firms, “big four” accounting firms, managed legal services providers, and corporate legal departments (Editor: and I would add several other forms of NewLaw provider as well – see Note (1) below. Converging from different directions, they are all competing for chunks of a huge market: legal services delivery.

I reached out to Liam Brown, founder and executive chairman of Elevate Services (a 2017 ACC Value Champion) to sound him out on the evolution of the market. He speculated that the definition of the practice of law would continue to tighten, and also predicted that BigLaw firms will eventually stop ceding territory, as some of them begin to invest in the long game of providing competitive, technology-enabled legal service delivery models.

Clients, in some cases, are helping them do that. Consider, for example, that 2016 ACC Value Champion Lucy Bassli of Microsoft applied a managed legal services model in contracting work assigned to key law firms. That is valuable experience for those firms — experience that they can now take to other clients. Fellow law firm Value Champions Bryan Cave, Reed Smith, and Seyfarth Shaw have helped clients with operational improvements — stay tuned for more of that innovation.

What resonated with me the most, however, is that two people who didn’t need a “do-over” (Liam Brown had built the LPO Integreon before going on to establish Elevate), have now found common cause in playing a role in how the legal ecosystem evolves. After all, it’s satisfying to help law departments — and law firms as well — deliver legal services better.

We at ACC share that enjoyment, and we hope that general counsel will continue to capitalize on the array of resources available to them as they take the reins in hand and apply value-focused sourcing and staffing strategies.

As the saying goes, “all boats rise.”

Author

Catherine J. Moynihan is the senior director of legal management services at the Association of Corporate Counsel. There, she is the ACC subject matter expert on managing the legal function and legal spending. She also leads the ACC Value Challenge, ACC’s initiative to reconnect the cost of legal services to the value received. Catherine is also the director of the section of ACC for legal operations professionals, and the ACC Law Department Executive Leadership programs for the heads of operations of very large legal departments. Catherine has an MBA from Columbia University.

Signs of the times: The rise of managed legal services first appeared on August 2, 2017 in ACC Docket and has been edited with the author’s permission for re-posting in Dialogue.

Notes: (1) NewLaw and (2) BigLaw, respectively, are neologisms which my books have introduced into the vernacular to denote the essence of business models of the so-called alternative providers of legal services (some are still offended if we call these forms ‘firms’) and the traditional law firm:

• NewLaw New Rules, 2013
• Remaking Law Firms: Why & How,  2016.

More on managed legal services in Dialogue 

• @PwC makes a game-changing move in legal services