BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Legal Change: Why Drip, Not Disruption?

Following
This article is more than 5 years old.

The past decade has produced dizzying change. The confluence of the global financial crisis, technological advances, and globalization has changed how people live and work. Disruption has replaced stasis as the ‘new normal.’

Tech-enabled companies have unseated entrenched market leaders and supplanted long-standing business models across multiple industries-- retail, entertainment, hospitality and, ride-hailing, among others. Social media has altered the daily lives of billions, providing instantaneous multi-media global connectivity. This has recast interpersonal communication and information gathering, commerce, media, data mining, and geopolitics. Cloud computing, SaaS, smart phones, artificial intelligence, blockchain, and other technology platforms have blurred the lines between work and ‘down time.’ Tom Friedman published The World is Flat in 2005, positing that globalization was ‘the next big thing.’ Just a few years later, its impact has been felt from Milwaukee to Marseilles. Globalization has moved jobs across oceans, igniting some economies and dousing others.

Law has not been immune to these global changes; this Trinity of change catalysts proved too powerful for the legal guild’s self-regulated barriers.  Still, law has yet to experience the ‘Full Monty’ disruption of other industries.  The legal marketplace is changing, but not at the warp speed characteristic of the times. Why?

Parlor Games and The Marketplace

‘When will law be disrupted?’ is a popular parlor game among legal pundits. They cite artificial intelligence (AI), blockchain, the Big Four accounting firms (a misnomer because they are diversified global legal service/product providers), and other entrants into the legal marketplace as potential ‘disruptors.’ These overheated claims grab eyeballs and lure people to conferences, but those in the trenches—legal providers and buyers—know that the legal industry is changing incrementally because the tight weave of its mosaic and culture cannot be easily reconfigured or quickly replaced. The shape of the industry is transforming from a lawyer-centric, parochial, artisanal guild to an inter-disciplinary, global digitized industry. This takes lots of ‘blocking and tackling’ and does not happen overnight. I learned that lesson with Clearspire.

There is no single technology, provider, buyer, or legal ecosystem stakeholder that will unilaterally transform the trillion-dollar global legal industry. Change involves several inter-related elements and stakeholders in the legal ecosystem—the Academy and providers; legal professionals and providers; and providers/legal buyers. Gradually accelerating change is occurring daily on multiple fronts in a legion of ways—some large and some small. Law’s metamorphosis is being forged by the interplay of technology; process and project management; digitization; consumer activism;  a new buy/sell dynamic--lawyers no longer control both sides of the process;  collaboration between/among lawyers, other professionals, paraprofessionals and machines; metrics; accountability to business standards; corporate delivery models with different performance/reward standards than traditional law firm partnerships; capital; and re-regulation (notably in the UK and Australia where the profession of law has been de jure subsumed by the business of law). A new global legal community is being forged. It is linked by technology, backed by investment capital, and fueled by industry activists committed to applying those tools to tackle law’s ‘wicked problems.’ It’s a consumer-driven, consumer-centric transformation that will provide greater access to legal services and improved delivery. Lawyers are on the bus, but they are not driving it.

From Guild to Marketplace

Law has, until recently, been structured by lawyers for lawyers. The profession was synonymous with the industry because law involved one thing: selling legal expertise. Now, legal practice—the profession—is being teased out from the business of delivering legal services—the business. Legal practice and the delivery of legal services are two separate, though inter-related elements of the legal industry. Each one demands different skillsets. That means lawyers are no longer the sole providers of legal services. Law has become a three-legged stool supported by legal, technological and business expertise. To date, no single provider has successfully integrated the three ingredients on a scalable basis. But the evidence suggests that’s about to change. A recent spate of collaborative efforts among law companies, corporate legal departments and law firms—UnitedLex’s ‘rebadging” of DXC and GE in-house teams, Deloitte’s collaboration with Allen & Overy, and multiple firms investing in delivery capacity—points to an ‘expertise convergence’ that will reshape the definitions and contours of in-house departments, law firms, and law companies. Entities that integrate practice and delivery expertise in a differentiated, scalable, and measurable way will become the dominant players in the marketplace.

Law firms have been slow to respond to changing market conditions for a variety of reasons including: (1) an initial hope that the post-recession marketplace would ‘return to normalcy’--it hasn’t and won’t; (2) their economic models are inimical to it; (3) an inability to raise investment capital due to regulatory constraints (an irony since lawyers are self-regulated); (4) lack of expertise in tech and process driven legal delivery and the unwillingness to accord it equal status with legal acumen; (5) the partnership model that ‘whacks up profits’ rather than re-investing them (‘short-termism’); and (6) passivity of buyers emanating from lawyers selling to other lawyers (that’s changing).  Firms have made changes, but largely internal ones that sustain profit-per-partner (PPP), the holy grail of their metrics. Internal belt-synching does not address clients’ demand for more cost-effective, efficient, metric-driven results, and that has opened the door to competition, especially from providers like the Big Four, Accenture, and law companies like UnitedLex, Axiom, and Elevate. These providers offer: (1) expertise in technology and process—and limited ‘regulated practice’ capability; (2) scalability and global reach; (3) ‘safe hands’; (4) price predictability; (5) value—cost commensurate with risk/importance/objective;  (6) agility and the ability to collaborate with other providers; (7) constant improvement; (8) investment in ‘the tools of the trade’; (9) client-centricity; and (10) business solutions, not legal ones.

The legal industry is morphing into a diverse, global, inter-disciplinary, tech-enabled industry focused on improving access to and delivery of efficient, metric driven, affordable legal services to a wider customer base. That transition takes time.

Some Key Changes

What are some of the key systemic changes that have occurred in the legal industry during the past decade? Here’s a partial list: (1) law is no longer solely about lawyers—it now includes other professionals, paraprofessionals and machines; (2) law firms, long the dominant provider of legal services, have seen work migrate to in-house legal departments, law companies;  and the Big Four accounting firms; (3) legal “practice”—differentiated knowledge, skills, and judgment possessed by some lawyers-- has narrowed while the delivery of legal services—the business of law-- has expanded rapidly; and (4) the ascendancy of legal procurement-- both cause and effect of change in the legal buy/sell dynamic.

Lawyers no longer retain exclusive control of the sale and purchase of legal services. That means legal providers—like other vendors—are subject to metrics that replace relationships, reputation, and puffery with value, performance, and customer satisfaction (net promoter score).  These changes are systemic but lack “buy-in” from most incumbents on the buy and sell sides. Translation: it will take time, but consumers, not lawyers, are now calling the tune.

The Lawyer Levee is About to Break

 Lawyers—and legal culture—are the principal drag on legal innovation. That’s neither an indictment of the profession nor a slight on the efforts of those actively engaged in expanding legal access and improving delivery. Law’s access to justice crisis, self-regulation,  gender pay gap, and low net promoter score reflect a purposeful tone deafness to customer sentiment. Several factors militate against lawyer activism-- (1) the remarkable resilience of the billable hour that supports the incumbent partnership model; (2) lack of financial incentive among older equity partners to invest in long-term investments; (3) limited access to capital (the result of self-regulation intended to inhibit competition); (4) a relative lack of pain in the pocketbook; and (5) legal risk aversion and conservatism.

Legal culture might take another generation or two to change—as was the case in medicine when it was subsumed by the healthcare industry—but the legal industry is not just about lawyers anymore. Lawyers and other professionals, paraprofessionals, entrepreneurs, investors--and legal buyers--will shape the delivery of legal services. Business buyers are  holding corporate lawyers to the same set of standards it adheres to. They want solutions to complex business challenges that include legal issues but are not regarded as ‘legal matters.’ Consider that in-house counsel play a dual role as defender of the enterprise and business partner, advancing the objectives of the enterprise. That dual role—peremptorily mitigating risk while simultaneously engaging in identifying and executing on business opportunities—is the essence of how corporate lawyers are expected to function and a harbinger of how all lawyers will function in the future.

Retail legal professionals have an opportunity to ‘do good and do well’ by more efficiently delivering access to legal services to tens of millions in need. This is not necessarily pro bono; tools exist to improve efficiency, reduce cost and expand access. The catch: lawyers must use them. They must—like physicians and other professionals—better leverage their time, collaborating with other professionals, paraprofessionals, and machines to expand the reach of their service.

Conclusion

 Whatever word one applies to characterize the ongoing change in law, what matters is that it will result in better alignment of the profession/industry with the society it is committed to serve. That's disruption.