12 Jun 2017

Law firms set to become obsolete

Law firms are increasingly irrelevant to the delivery of legal services, hampered by their structural defects and the inability to deal with client dissatisfaction.

Law firm management: Partnership structure has contributed to the downfall of law firms sophiejames

Law firms are becoming obsolete despite the fact they still have majority market share, according to one of the US's top legal experts. Lawyer, entrepreneur and academic Mark Cohen says a growing body of evidence points to the 'advancing obsolescence of the incumbent partnership model. The structural and operational characteristics of its replacement are now identifiable--even if its dominant players have yet to be determined.' 

Partnership model

Writing for Forbes, Mr Cohen says that the traditional partnership model was designed for the practice of law, not the delivery of legal services. He says that all  but a handful of firms have failed to navigate the transition to delivering legal services. 'Law remains their stock in trade, and technology and process are laggards. Worse still, IT and operations professionals are accorded second-class status within firms. In contrast, in-house legal departments and legal service providers are not only melding legal, IT, and process expertise, but they are also becoming enmeshed in their clients’ (customers’) business in ways that law firms do not.' Mr Cohen says this goes to the heart of why law firms are becoming extinct: they have failed to become integrated components in solving clients’ business challenges.

Structural challenges

He says that firms also face internal challenges related to their structure. 'The partnership model is decentralised; each partner is a ‘tent in the bazaar.’ Consensus is difficult to achieve, and institutional loyalty—to the extent it ever existed-- has yielded to peripatetic partners that ‘lateral’ frequently to competitors offering guarantees, signing bonuses, and higher PPP. That might be a short-term positive for the lateral partner and—in some instances—the transferee firm, but it does little for the client.'

Inhouse solutions

Inhouse legal departments have addressed the issue, he says. 'The DNA of leading in-house departments--that are both defenders of and partners of the enterprise-- and elite legal service providers is corporate, client-centric, and better aligned with the client/customer than law firms. That’s why so much work has migrated from law firms to in-house departments and service providers. Migration from firms is not simply a matter of price or enhanced use of technology and process. It can also be attributed to in-house and service provider integration with clients and an ability to deliver enterprise solutions to business challenges. This is the new legal delivery paradigm.' Source: Forbes