The future of collaborative legal services
I recently had the privilege to co-chair, alongside my colleague Janet Taylor-Hall, a roundtable discussion hosted by my employer, Integreon, and Legal Week. The participants were an impressive group of General Counsels and Associate General Counsels from leading global corporations and C-suite executives from Magic Circle and top global law firms. The topic was one that is particularly close to my heart: how in-house counsel, law firms, and legal process outsourcing (LPO) providers can and must collaborate to deliver more innovative and cost-effective legal services. It has been clear to me for a number of years now that there is a need for substantial change to the way legal services are delivered and I was extremely gratified to see a groundswell of agreement at the roundtable.
The reality today is that corporate legal departments are demanding that law firms reduce fees for routine work. In the early 2000s, law firms and corporate legal departments began passing work over the fence to LPO providers in an effort to reduce costs. This reactive approach doesn’t go far enough, in my opinion, and a more strategic and collaborative ecosystem needs to evolve. The roundtable participants agreed that in-house counsel, law firms, and LPO providers must forge strategic relationships to shape the evolving legal services delivery model. In short, you can either shape the change that is necessary or be shaped by it. I wanted to share the key themes that emerged from the discussion with my column’s readers.
Cost is not the only driver
While cost pressures remain one initial driver for change, there is consensus that the way legal services are delivered needs to be substantially redesigned. In addition to gaining significant cost efficiencies, a new legal services delivery model will also improve effectiveness of the services delivered and enable better risk management. Under a new collaborative model, corporate legal departments can better manage the flow of global contracts to reduce risk and realise revenue, ensure compliance with burgeoning regulation, more effectively control litigation risk, and close M&A deals more quickly.
Law firms continue to play a key role
Contrary to early concerns that LPOs would compete directly with law firms, it’s becoming increasingly clear that the new model is a true ecosystem with each member – corporations, law firms, and LPO providers – playing key roles. LPO providers do not “practice law” and are not true alternatives to law firms. Within this global legal ecosystem, in addition to practicing law, law firms provide critical oversight, supervision and bespoke, premium legal advice. In fact, neither LPO providers nor law firms can individually deliver the holistic, end-to-end services corporate clients require within this new legal services delivery model. Law firms are still, and will remain, the first “port of call” for premium legal advice.
While one could argue that law firms, particularly those with captive LPO units, can provide the full spectrum of services, it is difficult for all of them to do so as cost-effectively as required by their clients. It is difficult to envisage law firms maintaining the ongoing investment in process improvement and cutting-edge technologies required to sustain the new legal services delivery model. There are a growing number of law firms however, who are taking new solutions to clients in partnership with LPO providers. Furthermore, corporate legal departments look to law firms to share in – and sometimes even own outright – the responsibility of managing the LPO relationship or provide the requisite degree of supervision and quality control.
Corporate legal departments must be active and equal participants
Corporate legal departments must be willing to roll up their sleeves and work together with law firms and LPO providers to hammer out the legal services delivery model that most effectively meets their needs. In order to ensure that the new legal services delivery model addresses the requirements and challenges of corporate legal departments, law firms and LPO providers need visibility into the organisational metrics and processes of those departments. In fact, there are a few trailblazing GCs who are doing just that and they are already seeing positive results in higher quality, more complete solutions which are being delivered more cost-effectively. The law firms involved have seen an increase in revenue from the corporations they are working with and hence both sides have benefitted.
The pace of change must accelerate
Corporations are giving their legal departments mandates for change within timeframes measured in months, not years. Law firms, on the other hand, are traditionally slow to change and their very structure – typically being governed by a collective – makes it more difficult to support business model agility. All members of the ecosystem must find a way to evolve at a pace that will address the pressures – the drivers for the change – in a timely manner. Law firms who implement a culture of change and increase their agility quickly will, in fact, find themselves in a position of significant competitive advantage.
Champions for change will need to evangelise
There was general agreement on the inevitability of a new model for legal services delivery. This vision is not, however, universal throughout the legal profession – at least not yet. The roundtable discussion was extremely valuable and I’d love to see the dialogue continue. But in order to ensure that real change happens, we need to take action. The champions for change will need to evangelise within their respective organisations and communities to provide the communication, education, and motivation needed to transform the discussion into real-world change delivering true business value for all parties.