A view from London – Is the party over: stress testing for law firms

Law firms need to adapt not only to the current business challenges but also longerterm
legal market and consumer trends, says Richard Susskind

Many lawyers, understandably, do not
like the title of my latest book – The End of
Lawyers? Yet my message is a mixed and
not a negative one. I claim that the future
for lawyers could be prosperous or
disastrous. I do predict that lawyers who
are unwilling to change will struggle to
survive, but I also say that lawyers who
embrace emerging technologies and new
ways of sourcing legal work will trade
successfully for many years.

Many of my conclusions follow from
research amongst in-house lawyers.
Invariably, clients tell me they are now
under three pressures: to reduce the
size of their in-house teams; to spend
less on external law firms; and to find
ways of coping with more and riskier
legal and compliance work than in the
past. Both internally and externally,
clients are requiring more for less.

Consequently, law firms will
increasingly be asked to reduce their
fees, to work on a fixed fee basis, and
they will often be selected by hardnosed,
in-house procurement specialists
and not solely by in-house lawyers. The
legal market looks set to be a buyer's
market for the foreseeable future.

At the same time, new competitors
are emerging, such as outsourcers and
entrepreneurial publishers; while
liberalisation of the legal market will
bring external funding and a new wave
of professional managers and investors
who have no nostalgic commitment to
traditional business models for law
firms, including hourly billing and
gearing obtained through the
deployment of armies of hard-working
young lawyers.

Los directores jurí­dicos de
empresa están bajo
presión para reducir sus
costes internos y en
servicios jurí­dicos
externos, afirma Richard
Susskind reconocido
consultor. Esta situación
ofrece a las empresas una
posición privilegiada en
cuanto a la negociación
de servicios jurí­dicos. Por
lo que los despachos van a
tener que adaptarse no
sólo a los desafí­os de la
economí­a en general sino
además a las nuevas
necesidades de sus
clientes.

To cap it all, a number of disruptive
legal technologies are emerging (such
as document assembly, closed
communities, legal open-sourcing, and
embedded legal knowledge) which will
directly challenge and sometimes even
replace the traditional work of lawyers.
For many lawyers, therefore, it looks
like the party may soon be over.

I anticipate that the market is likely
to respond in two ways to these
changes. First, new methods, systems,
and processes will emerge to reduce the
cost of undertaking routine legal work.

This will extend well beyond the back
office of legal businesses into the very
heart of legal practice. To achieve the
efficiencies needed, I say that legal
services will evolve from a tailored
service at one end of a spectrum along a
path, passing through the following
stages: standardisation,
systematisation, packaging, and
commoditisation. Many new ways of
sourcing will emerge (outsourcing,
off-shoring, sub-contracting, cosourcing,
and more) and these will
often be combined in the conduct of
individual pieces of legal work. I call
this multi-sourcing. These changes
will affect not just high volume, low
value work but also, and vitally, the
routine elements of high value work.

The second response by the market
will be for clients, in various ways, to
share the costs of legal services. Inhouse
lawyers, I suggest, will
frequently work together, often as
part of online closed communities and
find ways of recycling legal work
amongst themselves. In areas where
their duplication of effort and expense
is considerable, such as regulatory
compliance, they will collaborate
intensively and so spread the legal
expense amongst their number. At the
other end of the spectrum, citizens
will have ready access to online legal
guidance and to growing bodies of
legal materials that will be available
on an open source basis.

Law firms face two challenges in
these difficult times. The first is to
steer their businesses through the
short-term difficulties of the next 18
months or so. There are no magic
answers here. The best will control
costs without incapacitating their
practices and will invest in
determined and focused marketing.
The bigger challenge, however, is the
long-term, when the recession
recedes.

I advise that, looking across a 3-5
year time frame, each business unit
within a firm should currently be
subjected to stress testing – a formal
evaluation of how it can face the
pressures the market will bring. Some
may not withstand the scrutiny and
may be seen as terminally threatened
by new developments. Others will
find opportunities for new and
exciting lines of legal business. Either
way, it is as well to know now.

Richard Susskind is a consultant and IT Adviser to
the Lord Chief Justice of England and Wales as
well as Visiting Professor in Internet Studies at the
Oxford Internet Institute. The End of Lawyers?
Rethinking the Nature of Legal Services
is
published by Oxford University Press.
A view from London – Is the party over: stress testing for law firms

Garcia-Sicilia

iberianlawyer.com

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