My time at Legalweek showed there's more interest in emerging competition to law firms than in potential structural change that will smooth the way for competitors. Here's why both matter. Want to weigh in? Email me here. Want this dispatch in your inbox every Thursday? Sign up here.

Don't Sleep on Regulatory Change

I came to a realization this week that some in this industry really need to have things spelled out.

What else explains the fact that a Tuesday session at the Legalweek conference in New York on regulatory changes to the profession played out in front of a half-filled room, but just a half-hour later, a session on the growing clout of the Big Four and alternative legal service providers drew a standing-room only crowd.

I trust that Law Firm Disrupted readers already recognize that these two subjects are really two sides of the same coin. While the ALSPs and Big Four are slowly expanding their reach both inside the U.S. and overseas, ending existing prohibitions on fee-sharing and non-lawyer ownership of law firms could easily prompt a rapid acceleration in the process. At the very least, it's not something that I'm willing to rule out.

Those who stayed away from the first panel missed an inside look at the reform efforts in three western states, with representatives from task forces in California, Utah and Arizona, and a wider overview of the civil justice crisis in America.

When people ask me what's changed since two decades ago, when a previous push towards liberalizing the profession came up short, my answer is the growing awareness both inside legal circles and among the general public over the striking number of Americans who struggle to find help for civil legal problems: we're now tied for 99th out of 126 countries in terms of access to and affordability of civil justice.

That reality is creating room for the conversation about taking radical steps to give consumers more options. One part of that is harnessing technology to bring down the costs of legal help to individual users. As Ross Intelligence CEO Andrew Arruda, who sits on the California task force, said Tuesday, "We have to move away from a system where surgeons are taking blood pressure and people are dying."

The fact of the matter is that this change will likely open up new opportunities for corporate clients as well. Immediately, the stakes are likely to be low. When asked about the Big Four, Arizona Supreme Court Vice Chief Justice Ann A. Scott Timmer said that she'd heard her state was simply "too small potatoes" for them to care about, adding that if one of the global accounting giants wanted to provide legal services, they'd have to apply for permission and submit themselves to regulation by her court like any other new provider.

But there's also an expectation that changes in a few states could lead to a groundswell of support across the country. Utah Supreme Court Justice Dion Himonas and Arizona State University professor Rebecca Sandefur said they'd be at Yale University next month talking to the Connecticut Bar about the issue. (Other state bar associations, led by New York, are mobilizing in opposition.)

Anyway, if many of your colleagues aren't paying tracking to the issue, those players outside of law firms certainly are. Even if they're outside of the U.S., like Madrid-based Luis Fernando Guerra, global leader of Deloitte's legal services business.

"I pay attention to many things in the U.S.," he said in the second session on Tuesday. "The Super Bowl, the NBA, the Oscars⁠—so why not deregulation?"

Karl Kong, senior vice president at flexible staffing provider Axiom, is also tuned in. He called more competition both an inevitability and a net benefit, even if it immediately affects his business. "The single most important thing about deregulation is to give individuals access to more legal services," he said. "At the end of the day, call me a capitalist, but competition is probably better."

Granted, it might be easier to welcome competition when you lack a partnership structure that impedes quick pivots (Axiom shed two of its units just last year) and have substantial capital to deploy from an outside investor (Axiom last year also landed a major investment from a European private equity firm.)

I don't know how reassuring you'll find the words from a representative of EY, but just a year ago, lead knowledge analyst Nicholas Bruch was helping dispense strategic advice to law firms as a colleague at ALM Intelligence. For him, there's more room for the Big Four to collaborate with law firms than to compete with them.

"If I was a small law firm in a regional market in the U.S., I'd see them as a potential partner," he said Tuesday. "Firms like Clifford Chance and Skadden: they offer capabilities right now that EY does not aspire to. And litigation firms, we don't aspire to that in the U.S. The pertinent question is how we can work together to grab the most market share that we can grab."

So did I end this on a comforting note? You tell me.

In the News

➤➤Let's stay on subject briefly and look at my colleague Christine Simmons' report that the New York State Bar Association is not feeling liberalization at all. The group's leaders are trying to mobilize opposition to an American Bar Association proposal that would encourage states to consider "new approaches" in the practice of law, and they say that Ohio, New Jersey, Illinois, Pennsylvania and Delaware have all lined up in the "nay" camp. These advocacy efforts are significant, but in the end, it's the state Supreme Courts that will have the final say.

➤➤Also from Legalweek: Industry leaders on the slow rate of transformation, how to build your nontraditional legal career, and automation as a tool to improve the work experience of young associates.

➤➤Has your phone been ringing off the hook from recruiters? According to my colleague Jack Newsham, while they have access to an increasing amount of data about firm and individual performance and financials, the business remains dependent on dialing up numbers and persuasion once the target answers.

You'll hear from me again next Thursday! Thanks again for reading, and please feel free to reach out to me at [email protected]. Sign up here to receive The Law Firm Disrupted as a weekly email.