Knowing this, a group of legal and business thought leaders conducted a pioneering study of the global legal industry to identify the key trends and uncertainties likely to impact the legal profession over the next decade. The Legal Transformation Study: Your 2020 Vision of the Future, published by Decision Strategies International and
The study identifies four strategic planning scenarios for how legal services may be delivered in 2020. The four scenarios — bluechip mega-mania, expertopia, e-marketplace, and techno-law — reveal multiple opportunities for mid-sized and independent law firms as a result of emerging key trends.
In the study, ‘trends’ are defined as important developments or forces that will continue in their current directions throughout this period. Trends can be predicted through demographics, economic projection and other shifts that are unlikely to stop or reverse themselves regardless of how key uncertainties play out. Throughout the research, 11 long-term trends were identified, including:
- work-life balance becoming increasingly important to Generations X and Y;
- the legal profession demanding greater diversity;
- increasing use of new technologies;
- the growth of internet-based service delivery;
- consistency and uniformity of legal information growing in importance;
- legal services increasingly being categorised and offered as higher and lower end offerings;
- global expansion of the legal practice continuing;
- demand for specialised experts continuing to grow;
- non-lawyer business managers in law firms and corporate legal departments seeing their roles enhanced;
- corporate management being granted more authority in the legal purchasing decision; and
- legal work increasing for economic and political/regulatory forces.
The Legal Transformation Study defines the approach of identifying these trends and determining future variances and possibilities as ‘scenario planning’. Scenario planning uses these different circumstances to stimulate strategic thinking by predicting particular opportunities and tactics in each given situation. How each trend will play out is affected by distinguishing indicators of change. These indicators include cultural perceptions, economic and environmental conditions, political and regulatory climates, social group profiles, and scientific and technological understandings. These indicators are then intertwined to build explanations of how events ripple and interact over time. What follows is a brief description of each of the scenarios.
Bluechip mega-mania
Bluechip mega-mania defines a model that emphasises the global consolidation of legal service providers and the dominance of giant law firms with vast global presence and offerings spanning all legal areas. Because of the global existence of this model, as well as the availability and variation of legal service offerings, many of the mega-firm’s young lawyers sacrifice their work-life balance for higher compensation and strenuous travel in order to bring their expertise to general counsel all over the world. International law school enrolments and immigration to the
Mega-firms have caused many large and mid-sized law firms to dissipate, either being purchased by one of these giants or having simply gone out of business. With the loss of the smaller, more specialised practices, these one-stop shops have had to categorise their offerings into higher and lower end offerings. On high-end specialised work, partners are heavily involved while partner interaction begins to dwindle as the level of work lessens, hence the substantial volume discount for low-end work. The lack of attention and specialisation from these global giants has enabled the local legal providers not only to deliver more legal expertise for the dollar, but also valuable regional and legislative knowledge.
Opportunities and tactics for mid-sized law firms/individual experts:
- potential for acquisition permits greater stability;
- providing depth of specialisation and expertise increases value, respect and reputation;
- lower overhead allows firms to compete for low-bid contracts;
- opportunity to use the internet to deliver basic legal information on a pay-per-view basis;
- pay-per-use automated tools enable business people to complete non-complex tasks with assistance; and
- hiring becomes more diverse to enable a unique workforce that is able to serve multinational clients.
Expertopia survival in the land of the specialist
Expertopia is a scenario that envisions the increasing complexity of the law and challenges of corporations operating in multiple environments worldwide, thereby placing a premium on specialisation and expert-driven cultures at legal service organisations. In this scenario, specialisation is dominating the industry; larger firms are being challenged by the smaller, more concentrated firms, while many of the mega-firms have been broken down by the regulators to prevent the increasing conflict of interest issues that often occur with providing all services to one client. Technology is on the upheaval, and international recruitment and diversity is down. Strong nationalism has restricted the ability of US lawyers to obtain international experience, therefore increasing prices on commodity-type work and litigation or, often times, outsourcing these to offshore resources. Software-as-a-service defines today’s technology as the legal marketplace handles client relationship management, billing, customer ratings, service evaluations and provider profiles. General advice issues are disseminated through the means of pre-recorded, pay-per-view video briefings, while attorney’s services are rated by means of Legal Facebook, a tool basing skills on certification and credentialing. This system benefits most senior lawyers, but penalises new lawyers who cannot compete due to lack of qualifications.
Opportunities and tactics for mid-sized law firms/individual experts:
- recruit new talent from disbanded practices of large firms;
- important to develop reputation based on unique expertise;
- challenge competitors on price;
- utilise the web to deliver basic legal information on a pay-per-view basis;
- pay-per-use automated tools enable business people to complete non-complex tasks with assistance; and
- create competitive advantage through collaboration of teams and expertise.
The e-marketplace
The e-marketplace model is built on the premise that technology will be a catalyst, but not the core, for an industry transformation in which an array of web-based technologies will make information more available and expert judgment more valuable. Deregulation has enabled competitors to enter the industry by removing the profession’s credentialed status. Work previously performed primarily by lawyers has been extended to include consultants who have expanded their services by providing legal advice in addition to practical processes. New technological products delivering bundled, automated legal content and process solutions have put a high percentage of lawyers in competitive jeopardy. Additionally, global providers and their variety of offerings have contributed to this ultra-competitive environment. The purchasing of legal services is standardised and accomplished via Legal Facebook. Price rules and expertise is greatly devalued. Most legal work is commoditised, aside from a few very specialised services.
Opportunities and tactics for mid-sized law firms/individual experts:
- develop and market knowledge-base systems by identifying key industry specialities;
- create automated systems by partnering with workflow tool manufacturers; and
- expand pool of potential customers by offering tiered services.
Techno-law
Techno-law contemplates rising corporate investment in automation capabilities throughout the legal services industry, leaving only the high-end services to be delivered by legal professionals and potentially requiring a complete reconstruction of the traditional business models in the legal services industry. Globalisation is operating in a harmonious and multifunctional manner as technology enables streamlined international legal work and regulatory environments to align. Outsourcing has become a standard procedure, while the rise of emerging economies has created a supply pool of expertise as well as new markets for legal services.
Opportunities and tactics for mid-sized law firms/individual experts:
- reduce costs by outsourcing back-office services;
- preserve revenue and cut costs by outsourcing litigation;
- compete with mega-firms by forming networks, which extends expertise;
- challenge mega-firms by offering competitive pricing; and
- be the first to bring new products to the market, creating first-to-market advantage.
These scenarios were developed based on predictions of how each indicator of change will affect the role of the key trends; the amount of impact as well as the prevalence of each will determine how the legal industry will evolve in the coming years.
“In the past, law firms and corporate law departments have frequently been taken by surprise by unexpected forces that directly influenced the practice of law,” says Jim Seidl, president of
The Legal Transformation Study will provide organisations involved in the legal industry with solid market thinking on which to build long-term plans that anticipate the changes likely to impact them on a global level. Awareness of these factors is just the beginning. Understanding and making preparations to take advantage of the opportunities presented by these trends will allow the smart participants in the legal profession to thrive.
Tanna Moore is president and CEO of Meritas, one of several sponsors of the Legal Transformation Study.LawFirmNetworksMay2008
