Heal thyself - law firms will remake themselves for the age
Earlier this week, a consultant I know pretty well took me to task for arguing recently that clients are, despite often complaining about law firms, largely failing to push through change in the legal industry. But I stand by the case that I made then: much of the current innovation is coming from law firms looking to gain an edge on their rivals rather than being forced through by clients.
December 07, 2010 at 01:56 AM
3 minute read
Earlier this week, a consultant I know pretty well took me to task for arguing recently that clients are, despite often complaining about law firms, largely failing to push through change in the legal industry. But I stand by the case that I made then: much of the current innovation is coming from law firms looking to gain an edge on their rivals rather than being forced through by clients.
And the events of recent weeks only reinforce that impression. In two weeks, we've seen Herbert Smith announce the launch of a new centre in Belfast to handle document review work, CMS Cameron McKenna agree a deal to transfer the vast majority of its back office to an external provider and Berwin Leighton Paisner (BLP) confirm that it is considering hiving off its 'virtual' law firm, Lawyers on Demand.
You can get into a debate about the individual merits of these moves – though I'd wholeheartedly support the logic of Herbert Smith's venture – but the key significance is that all three cases show major law firms experimenting with substantial revisions of their business model.
Even for someone who has questioned many of the more extreme claims made regarding dramatic upheaval in the legal market several times, this seems pretty significant. And you certainly don't have to be a hardcore adherent to the need for a legal big bang to believe that the pace and ambitions of such ventures will increase next year as the most radical elements of the Legal Services Act come into force.
There is another area of significance, which relates to the breathless claims made regarding the legal process outsourcing (LPO) industry. For me, these initiatives show that law firms will increasingly move to appropriate the ideas and business models being pioneered by the LPO firms. This will happen both within fully-owned divisions, as with Herbert Smith, and within arms-length businesses and related brands in the way that BLP is investigating. I'd be surprised if one or more law firms don't create or acquire LPO divisions themselves.
Indeed, it may be that the primary impact of the LPO industry on the legal market is that it forces through radical change within the traditional law firms. In my experience, law firms are very good at putting off change for as long as they can get away with it, while being pretty good at rapidly adapting the minute that they have to. (The former weakness is well documented, the latter strength rarely noted.)
Certainly, the emerging LPO industry – which remains a good way off, being even 1% of the size of the global legal market – is being naive if it expects law firms to keep trudging on like lumbering dinosaurs as this new breed emerges. All of which seems good news for the clients. They may not have driven this particular shake-up, but they would be well advised to milk it for all it's worth. Either way, 2011 won't be dull.
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