Blog - Management speak

Mirror mirror on the wall

New law options are on the menu for most legal departments if a plethora of surveys are to be believed, says ex-general counsel Tim Bratton of Lawyers on Demand.

Alice encounters a new world Oleg Golovnev

Another day, another research survey. Last month saw the publication of Winmark's annual Looking Glass report, headlined *exciting fanfare* "The Future of the Legal Sector".  

It's easy to be cynical about these surveys.  They make bold predictions, no-one ever monitors if they turn out to be right, we're told the profession is changing and that if we all make technology work a bit better then the lawyers can go home and leave everything to an army of robots programmed by Professor Susskind.  At least I think that's what the report's Executive Summary said.

Full credit though to Winmark for putting together a survey based on what looks like a solid sample base: 122 in-house lawyers and 160 law firm partners, including 15 in depth interviews "with a selection of experts from the sector" (I particularly recommend page 31 as required reading!).  And taking a deep dive beneath the surface of the report, there is (or are, never sure) some interesting data to play with.

The report's foreword is written by Sean Connolly, Mayer Brown's senior partner.  This blog post reporting on the report's launch event suggests it may have been a trying evening for him.  But whilst Mr Connolly trots out the obligatory announcement that "the business of law is changing", he makes an important and not often heard point that "we need pragmatic and exploratory discussions between in-house lawyers and law firms about the way in which work is serviced and priced".

I welcome this gentle nudge by Mr Connolly because as I've written before it is ultimately the buyers which will shape our future legal profession and he is right to point out that they are needed in this conversation.

So, what stares back at us as from the looking glass of the report?

It tells us that “pressures on cost and efficiency have been accepted as the new normal by most, and new approaches are being explored both in-house and by legal services providers".  

Well, I'd agree that there is definitely a new normal out there.  In the long run, that's definitely a Good Thing for those of us in the New Law camp, because our models were in part designed to alleviate the cost pressures brought about by the financial crisis well before it became the new normal.

In the short term though, it brings challenges too because clients have also got used to tightening the screws on their Old Law panel firms who've had no choice but to play ball during difficult times.  To a degree this has arguably lessened the need for some in-house teams to embrace New Law providers as tightly as they might have done, but my own sense is that most law firms, whatever they say, feel more comfortable following their pre-crisis modus operandi simply because that way of working is hard wired into most firms' DNA which is not designed for this so-called new normal.

Perhaps supporting my view, the report goes on to find that "the improving labour market means staff have more opportunities to change jobs and alternative models appear to be growing in credibility and appeal".  This is put somewhat more directly by Richard Fleetwood (ex-Addleshaw Goddard partner and founder of the GC hub) in his recent blog post with the memorable line that “Jonny [from] Guildford…doesn’t want to work for private practice anymore.  He’s ambitious and despairing about the slow pace of change.  He’s going to work for Lawyers On Demand or Keystone or a raft of other virtual or contract law firm models”.

Quite. And interestingly 38 per cent of the law firms surveyed by Winmark highlighted "retention of staff" as a key risk facing their business.

That retention issue is music to our ears at LOD and an important reminder that it's not only clients who stand to benefit from a multitude of new supplier options in the new legal marketplace.  It's the talent too, or lawyers as we traditionally call them.  For more on this subject, I recommend the recent, fascinating jottings of the Canadian lawyer, blogger and futurologist, Jordan Furlong, in his travel guide to the future legal landscape which we commissioned at LOD.

One finding in the report which surprised me is that in-housers put "improving the quality of support from external counsel" at the bottom of their strategic priority shopping list.  At first blush, that doesn't look great news for us New Law renegades seeking to change the way in which the profession works.

Yet turn the page and the news gets better.  Almost a third of in-housers plan a review of their law firm relationships.  Suddenly the New Law champagne is back on ice but before we have time to pop the corks we learn that only 13 per cent of in-house teams apparently plan to look at alternative resourcing models in the next 12 months.  Patience may be the game plan here and that's okay, we're not going anywhere.

A further contradiction in the responses appears in a subsequent question asking in-housers to measure the "perceived impact of innovation on the legal sector".  Appearing high on the list only after the old chestnuts of "alternative fee arrangements" (Innovative?  Still?  Really?) and "technology" (yawn) is, wait for it, "contract legal services".

The news gets even better for New Law as the report shares that "in-house legal teams are also displaying a willingness to purchase legal services from non-traditional providers", with  44 per cent of the in-house respondents saying they would buy legal services from a virtual law firm and almost 40 per cent from what the report terms as "freelance legal professionals".

And perhaps the best news for New Law comes (and we can finally allow ourselves a quiet toast here) when we read that only 3 per cent of law firms regard those same "freelance legal professionals" as a major threat and only 10 per cent seem too bothered about the look of virtual law firms.  Keep on ignoring us, we really don't mind.  For now it looks like the law firm defences are firmly focused on the accountants, with one in four law firms regarding them, no doubt rightly, as a major threat.

So are the law firms putting their heads in the sand by not taking New Law models seriously as a threat?  Or are 40 per cent of the in-house respondents wrong?

Time will tell but perhaps both sets of respondent are right.  As I wrote recently in The Lawyer, Big Law is best for, well, big stuff and New Law is best for, well, a lot of the other stuff.  It doesn't have to be an either/or approach.

So what conclusions can we draw?  Well, whilst the survey predictions are mixed, what is without question is that the buyers of legal services are voting with their cheque books.  This assertion is backed-up by hard data too, with LOD, like many of our competitors, recently reporting strong revenue growth which doesn't just point to changing buyer habits in the future, but already changed buyer habits in the present.  Again, it's that new normal.

My own conclusion is a simple one.  To a degree, I don't really mind what the predictions are one way or another as long as potential buyers are thinking about the range of options open to them and the survey proves that they are.  That's exciting because the first step to winning a new piece of work is being on the radar in the first place.  There's no doubt from reading the survey that New Law options are now squarely bleeping loudly in the centre of those in-house radars.

It's tempting to end with a quote from Mark Twain about statistics, but instead we'll do a bit of Alice in Wonderland and stare back into the looking glass.  However one frames the picture painted by the data in this particular mirror, I see lots to be positive about in its reflection.

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16 April 2015

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