In an article, published in Law 21, on 20 September 2019, Jordan Furlong shared his insights on the emergence of “the new legal economy.” In it, he describes how the legal profession first evolved from being the profession of lawyers into a legal market. And now we are seeing the next major transformation, where a new legal economy is starting to take shape. Several evolutions indicate that this indeed seems to be the case. Let’s have a closer look at what’s happening, and what the implications are.
Less than a century ago, the legal profession consisted only of lawyers, and they were the only ones offering legal services to legal consumers. Then, in the last decades we saw how a new legal market came into being. Two evolutions played an important part in that. The first one was that law firms started being managed like companies, which meant that more and more non-lawyers started playing a part in law firms, and that lawyers started changing the way they worked. A second evolution was the rise of Alternative Legal Service Providers, where the market was disrupted by non-lawyers offering legal services.
Evolution 1 – the de-lawyering of law firms: As law firms became commercial legal service providers, they started focusing on service delivery, on productivity and profitability. Running a law firm these days requires skillsets like project management, data analytics, design, business basics, digital basics, risk prediction and management, talent management, strategic planning, financial management, vendor management, technology support, knowledge management, growth and development management, communications, litigation support, workflow automation, and others. Law firms now often have law librarians, legal knowledge engineers, legal data analysts among their staff. Some bar associations are even considering allowing law firms to have equity partners. In this new market, law firms must serve more clients and serve them more efficiently, holistically, empathetically, and cost-effectively. This evolution has led to changes in who works at law firms, and in how lawyers work.
Evolution 2 – Alternative Legal Service Providers (ALSPs): In recent years, we have also seen a sharp increase in non-lawyers providing legal services. The services they offer at this stage typically focus on litigation support, legal research, document review and e-discovery. In less than three years, the number of law firms in the US that use the services of these ALSPs has tripled. By now, more than 1 in 4 law firms already uses their services. And a recently published survey by Thomson Reuters revealed that about 52 percent of corporate Canada either already uses alternative legal service providers for litigation support or will do so within the next five years.
Apart from these two main evolutions, there are other changes affecting the legal market as well. These include “the rise of legal process improvement and outsourcing, the technology-driven commoditization of legal work, the growing sophistication of large law firms and law departments, and the slow but steady liberalization of legal regulation.”
Furlong notes that throughout all these market changes, one thing has remained largely constant, and that is what lawyers do. The market evolutions described above are changing the how lawyers work, and to some degree who is active on the legal market as well. But thus far, it has had relatively little impact on the what lawyers do. And now that too is about to change.
Traditionally, lawyers did mainly two things: offer legal advice (including the drafting of contracts, etc.), and litigation. With the progress being made in Legal AI, we are seeing ALSPs who are offering legal advice, and are offering services like automated and smart contracts. (Though a German court has just ruled that automated contracts still have to be supervised by lawyers). And more and more, legal consumers are going out of their way to find ways to avoid litigation. Both of these changes directly affect what lawyers do.
Furlong: “The old legal economy consisted of paying lawyers by the hour to do every legal task that needed to be done. In the new legal economy, systems, software, and structures are going to integrate, automate, delegate, and eliminate countless legal tasks by which lawyers once made a living.”
Because of this, it becomes essential to redefine what lawyers as well as law firms are and what they do. In this context, Furlong says three important questions must be answered:
- What now constitutes “legal work”?
- How will legal work be done?
- What will lawyers do?
Something to think about.
But rest assured that we here at INFORMA keep on closely following all these evolutions to be better able to serve you.