The Changing Ecosystem of Legal Services

Session Description:  The legal services ecosystem has changed radically since the turn of the century. This session explores those changes and suggests some responses.

[These are my notes from a private gathering of senior knowledge management professionals from large law firms. The meeting attendees come from law firms around the world. The participants in this session include a Big Law CKO, an in-house counsel, a legal services provider, and the founders of two AI companies.]

  • History of the legal profession: Legal services were largely unchanged from the 12th century to the 20th century. We worked much like the old guilds of craftsmen
  • Context Changes:
    • client businesses have grown in scale and complexity, resulting in bigger and more complex legal issues
    • client businesses have become truly global, so multi-jurisdictional issues abound
    • legal issues are more often multi-disciplinary: economics, engineering, accounting, data analysis
    • our privileged position as professionals has eroded
    • technology has changed the way we work, improving speed but not always improving productivity
    • clients have become buyers, so the nature of lawyer-client relationships have changed and costs are the focus
  • How the “legal species” has evolved in response
    • clients have law departments
    • traditional law firms: Big law, Mid law, etc.
    • some law firms now have “second label” firms to deliver legal services differently
    • law firms have spun off consulting shops
    • temporary staffing agencies augment traditional law firm staffing
  • The ecosystem now is more complex
    • in-sourcing = keeping the work inside the client’s law department
    • out-sourcing
    • multi-sourcing = parceling the work out to a variety of providers
    • procurement
    • project/process management
    • cooptition — where competitors work together
    • virtual firms and networks
    • systems thinking
  • What does the legal ecosystem include?
    • living elements
      • clients
      • law firms
      • law schools
      • alternative legal providers
    • non-living elements
      • increasing regulation
      • increasing concern for privacy
  • Trends in the legal ecosystem
    • the emergence of Legal Ops and procurement practices
    • advances in technology
    • law firm substitutes offer traditional and new legal services
    • VC investment in the legal sector
  • Learning from the Travel Industry
    • What drove the changes from one ecosystem to another?
      • automation
      • alternative service providers — lots of startup offering alternative services and alternative ways of doing things
      • enhanced technology
    • What has happened in the travel industry will happen in legal; the pie will be distributed differently
    • These changes are already happening in the legal industry
    • Assume that the changes will happen faster than you expect
    • Google has found ways to automate the resolution of legal issues internally. Fewer issues will be referred to internal and external counsel.
  • Practical Ways to Respond:
    • Gear up — invest in legal operation
      • find and hire experts in operations, information, and technology
      • give them a seat at the table
    • Standardize everything
      • legal playbooks, decision-making processes, customer interactions — all should be standardized
      • fewer decisions should require human interaction or expertise — only the difficult or complex issues
  • The In-House Perspective on these Issues:
    • Our standard office tools (MS Office) do not appropriately manage legal work inside a company or with external clients
    • Centralization and standardization are key:
      • We need a central platform to enable better legal processes
      • How do we work together when we all have proprietary systems with their own logic and processes
    • All information should follow the same data structure
    • Content should be semantically categorized

[Photo Credit: Wikimedia]

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