The litany of law firm gripes is long and familiar: exorbitant cost and rates, overstaffing, budget unpredictability, IT and process deficiencies, and limited knowledge of clients’ business. One would think that law firms would be responding to all this—they read and hear about it every day. So why are legal consumers—not law firms—driving change in the legal marketplace? Simple answer: most large firm partners have yet to feel the financial consequences of stasis and are staying the course so they can “run the table.”
It’s hardly news that the once-cozy relationship between BigLaw and corporate legal departments has morphed into something quite different. In Facebook terms, it’s gone from “in a relationship” to “it’s complicated.” Relationships once cemented over rounds of golf and scotch have yielded to RFP’s and reverse auctions. The bloom is off the rose. And clients are voting with their feet as companies replace law firms about as often as laterals hopscotch in search of sweeter deals. But corporate legal departments are doing a lot more than simply substituting one firm for another.
Law has a distribution problem. Too many corporate firms vie for a shrinking pool of outsourced work. Competition is also fierce in the retail segment of the legal market where, paradoxically, tens of millions of individuals and small businesses are unrepresented while thousands of lawyers are unemployed or under-employed.
The Guardian recently reported that senior partners at Magic Circle firms now charge 1,100 pounds an hour— that’s $1,500 plus an expensive lunch. U.S. firms average a bit less, but their rates are not for the faint-of-budget, either. The National Law Journal reported that for 2014 the top 14 U.S.-based firms had a $980 average partner billable hour rate. Senior partners charge well above that and top out in the same zip code as their Magic Circle competitors.
Remember the Clash song “Should I Stay or Should I Go”? The opening chords and lyrics come to mind when the “Do I insource or outsource?” question is raised. And that is happening a lot these days- both the question and the flashbacks.
Most people — especially lawyers — would not imagine that a legal technology company’s focus is on customer satisfaction. After all, aren’t those companies, so the thinking goes, bent on replacing lawyers?
A recent visit to LegalZoom revealed that it is deeply committed to ensuring its technology is customer friendly. It is equally zealous about optimizing customer satisfaction for its subscription services customers. These are individuals and small businesses that, for a monthly fee, have unlimited 30minute consultations with a panel of counsel. The attorneys are independent contractors who maintain their own practices while providing consults for LegalZoom customers. These sessions often result in client engagements for which LegalZoom receives no fee.