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…]
I recently had a long conversation with Iohann Le Frapper, a French lawyer and Board Chair of the Association of Corporate Counsel (ACC). We identified several common challenges confronting lawyers — legal education and new skillsets, access to justice, technology and globalization yielding automation and labor arbitrage, the ‘gig economy,’ ethical challenges, and new models of legal delivery. These issues transcend geography or regulations. They are global challenges whose solution demands a broader perspective.
While legal practice-what lawyers do-may not have changed much over the past few decades, the delivery of legal service-how and by what structure they are delivered- certainly has. Disaggregation of legal tasks has disrupted the longstanding hegemony law firms have had over the delivery of legal services.
New Elements of Legal Delivery
Dentons is the Donald Trump of the legal vertical. The firm is brash, bigger-than-life, and something entirely different. It receives a disproportionate amount of press because it is always doing something that drops jaws.
Around The World in 80 Days (Almost)
Dentons has had a very busy year expanding across the globe. One new region it targeted was Latin America. The firm retained former Inter-American Development Bank General Counsel Jorge Alers last year as its regional CEO. Mr. Alers was tasked to help identify and vet firms in the Mexico, Central and South America and Caribbean region.
About two weeks ago, it was reported that Dentons was about to welcome two Latin American firms into the fold. They are Colombia’s Cardenas & Cardenas and Mexico’s Lopez Velarde Heftye y Soria (LVHS). Bienvenidos! This will add another 90 lawyers to the existing roster of 7,000 Dentons lawyers. More significantly, the deals mark Dentons’ entry into a new and growing segment of the global legal market. And they burnish the firms’ global brand.
The sales process in law used to be so simple: partner at law firm has a relationship with the General Counsel or a subordinate in-house attorney. Company has a legal matter and ships the matter over to the firm who handles it start-to-finish. An invoice is presented. It reads: “For legal services rendered,” followed by a large and arbitrarily conceived number. Repeat cycle.
But that was then and this is now.
Law firm rainmakers can no longer rely solely on “relationships” to secure work. Competition is fierce among law firms, both domestic and foreign-based. Institutionally backed legal service companies offering products and services now vie for pieces of matters — sometimes portfolios — once handled exclusively by law firms. Example: Axiom recently signed an eight-figure deal with a major financial institution involving regulatory work.
Then there are contemporary “beauty pageants,” called Request for Proposal (RFP) that require legal service providers to jump through hoops just to be considered for work, either existing or prospective. And let’s not forget company IT Departments who routinely vet providers for their level of security, compatibility, etc.
But that’s not all that has changed.
The Business of Law Encounters Business Standards
In-house legal departments have grown in size and stature and are handling a greater volume and complexity of work, much of which was once outsourced to law firms. Many in-house departments now take a business approach to legal delivery that includes utilizing business, IT, and procurement professionals to vet outside legal service providers.
An org chart of large in-house departments often has a dizzying array of titles, many with “General” “Chief,” and “Senior.” Some in-house departments have their own Chief Financial Officers — not to be confused with the C-suite variety — who manage the financial side of legal operations, both inside out. An increasing number of companies engage Procurement to vet legal providers and to serve as gatekeepers. Final selection of law firms generally remains with the GC or senior designees, but Procurement is frequently the decision maker when it comes to legal service companies (e-Discovery, staffing, IT products, etc.). [Read more…]
Stories about law and money are as common as corned beef and cabbage on St. Paddy’s Day. They usually chronicle large law firm acquisitions, peripatetic laterals, or practice groups migrating to a firm with a higher profit-per-partner. Recent events involving a US legal service provider, a Chinese law firm, and a UK firm confirm that the law and money story is developing new plot lines emblematic of changes in the global legal services landscape.
Avvo and its Latest Stash of Cash
Avvo, an online legal marketplace and legal directory that provides legal advice and information on a fee basis, was launched in 2007. The company has been well capitalized from inception, and by 2014, $60 million of institutional funds had been pumped into it. But that was just an opening gambit. Avvo recently raised an eye-popping $71.5M additional round of funding at what Bloomberg reported was a $650 million valuation. What will the company do with that huge cash infusion? Hire more engineers, create new product offerings, and expand headcount—mostly non-lawyers. Not bad for a company that launched 8 years ago and, in the words of its CEO, Mark Britton, “we’re just getting started.”
Avvo operates in the retail end of the legal vertical where there is a huge consumer appetite for affordable products and services. The company is not a law firm but it does connect lawyers—about 225,000–to clients. It also offers an advisor service where customers are charged $39 for a 15 minute consultation with a lawyer.
Avvo is the legal equivalent of Match.com, utilizing technology to create a marketplace of buyers and sellers fed up with “the usual suspects.” Let’s hope that Avvo’s customer satisfaction rate rivals Match. [Read more…]