Competition for corporate legal work is keen. Law firms vie with each other for a shrinking segment of outsourced legal work. Corporate legal departments and a growing array of well capitalized, tech and process savvy service providers now account for an almost 50% of legal spend. It’s not surprising, then, that law firms are stepping up investment in marketing and business development activities. Will this narrow the growing delta between rising demand for legal services and declining call for law firms? Short answer: not unless law firms address the myriad of reasons for client dissatisfaction as well as differentiate themselves.
The legal profession has a dismal record on diversity—especially large law firms. Between 2007 and 2015, there was a decline in the number of black attorneys in big firms. And, per the same study conducted by the Minority Corporate Counsel Association and Vault.com, the number of Asian-American lawyers receiving promotions in 2014 was less than in 2007.
There are three categories of intelligence in the legal vertical–intellectual, emotional, and artificial. Many lawyers have elevated IQ’s, though relatively few seem to possess high EQ’s– commonly called ‘people skills’. Only the best lawyers—trusted advisers– have both. Artificial intelligence (AI), a recent entrant in the legal vertical, scores high on IQ, but the jury is still out on whether machines can develop comparable EQ.
The legal industry is known for adherence to precedent, not innovation. While precedent remains a guiding principle in the practice of law, innovation is transforming the models, methods, and players involved in the buy/sell process of legal services. Technology, process, access to institutional capital, re-reregulation, client demand for enhanced value, and changes in other professional service industry delivery models—notably medicine and accounting– are legal innovation’s principal drivers.
Mark Cohen discusses his career and the changing legal market on LegalBusiness World podcast.
Legal education has received a great deal of criticism in recent years—cost, student debt burden, declining enrollment and selectivity, a baffling building boom, graduates that are neither practice nor market ready, dismal job statistics, etc. What has been largely overlooked in the legal education discussion is the plight of a far larger segment of the legal ecosystem– practicing lawyers.
It’s A Whole New Ballgame
Lawyers are toiling in an industry that has been overhauled by a perfect storm of change agents– the global financial crisis of 2008 and its fallout; client dissatisfaction with existing delivery models; the escalating role of technology and process management in legal delivery-often referred to as ‘disaggregation’; an influx of legal service providers and the growth of in-house legal departments (read: law firm competition); and the creation of new delivery models. How will practicing lawyers receive the (re)-training necessary to survive—much less to thrive—in the new legal delivery order?
Most practicing lawyers were prepared for a legal marketplace that is vanishing. Their law school experience was steeped in doctrinal learning and, perhaps, a dollop of ‘real life’ exposure via clinics. And while that was just fine as recently as a decade ago, it’s not now. Legal delivery, once synonymous with the practice of law, is now a three-legged stool comprised of legal, technological, and process expertise. The vast majority of practicing attorneys have had little or no preparation for navigating the impact of technology and process/project management on legal delivery. Nor have they learned about collaboration, leadership, financial fluency, or other skills at law school or on the job where they are consumed by billing hours and making a living. That’s why practitioner re-education must be a part of the legal education reform discussion. It’s not just law students who must be educated for the new legal marketplace and where it’s headed; it’s practicing lawyers, too.
The rule of law is the foundation that supports the pillars of our democracy. It creates a social contract and is the arbiter of disputes as well as the insurer of basic human rights. Lofty stuff, but what exactly is the rule of law? The World Justice Project offers a four-pronged functional definition.
- The government and citizens are accountable under the law.
- The laws are clear, just, and applied evenly to protect fundamental rights, including core human rights.
- The process by which the laws are enacted, administered, and enforced is accessible, fair, and efficient.
- Justice is delivered timely by competent, ethical, and independent representatives that reflect the makeup of the communities they serve.
It’s time the U.S. legal industry puts pressure on State Bars to effect re-regulation that promotes competition, sanctions law firm investment capital for technology, process, and retention of top-flight talent, and allows ‘non-lawyers’ to invest in law firms, share profits, and take them public. Australia sanctioned such re-regulation of legal guild rules nearly two decades ago. The UK followed that path about a decade later with the passage of the Legal Services Act of 2007 (LSA) and its implementation in October 2011. Other developed nations—France, Germany, and Canada, for example—are on the cusp of some form of re-regulation. The U.S. has stood pat and has thrice rejected efforts aimed at re-regulation during the new millennium. Why? [Read more…]
The Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Legal Executive Institute recently released their 2017 Report on the State of the Legal Industry. ‘The Georgetown Report,’ as it’s commonly referred to, confirms that corporate legal buyers are directing more work away from large law firms, electing to take it in-house or to legal service providers (read: alternatives sources to the traditional law firm partnership model). [Read more…]