Big law firms having to become multi-disciplinary, report finds

Jones: More collaborative and multi-disciplinary model

The biggest international law firms being driven by their clients towards a multi-disciplinary “integrated solutions” approach to delivering legal services, a report has found.

But it said this would “not be easy” for most of them: “For some, there will be challenges of scale, as they seek to develop the footprints needed to meet their clients’ requirements. For others, identifying, hiring, and retaining talent (non-legal professionals as well as legal) will be particularly challenging.

“For many firms, innovation may be inhibited simply by the lack of access to adequate capital, as market pressures to reinvent work processes and expand the availability of a multidisciplinary practice workforce may belie the established wisdom that the practice of law is not a ‘capital-intensive business’.

“But however difficult such a transition may be, there can be little doubt that market forces are now moving inexorably in that direction.”

The 2020 Report on the State of the Legal Market, conducted jointly by Georgetown University’s Center on Ethics and the Legal Profession and the Thomson Reuters Legal Executive Institute and Peer Monitor, focused primarily on the US but included the large UK firms too.

It found that alongside increased reliance on “allied professionals”, like accountants and technologists, improved internal systems and greater use of alternative legal services providers (ALSPs), some firms had been setting up “captive subsidiaries”.

Allen & Overy has launched several, such as A&O Consulting, aosphere (for regulatory and legislative tracking worldwide), technology incubator Fuse and flexible staff provider Peerpoint.

Dentons, meanwhile, had launched Dentons Risk Consulting, while Eversheds Sutherland had launched Konexo, an ALSP, Eversheds Sutherland Consulting and Eversheds Sutherland Ignite – all of them providing services for in-house departments.

The report found that the pace of technology-driven change had “vastly accelerated within the last few years”, amid growing evidence that some law firms were “not only embracing such change but actively cultivating it”.

Some firms, like Clifford Chance with Applied Solutions, had launched their own software development businesses. Others had introduced consulting services designed to encourage innovation in legal technology like Denton’s NextLaw Labs, a tech accelerator, or NextLaw Ventures, a tech venture capital investor.

The report concluded that clients would “continue to drive all service providers, including law firms, toward multi-disciplinary practice-type services designed to provide integrated solutions to business problems”.

It warned: “In the long run, the fundamental choice that most law firms face is to adjust to the new realities of the marketplace or face an increasing erosion of their abilities to compete effectively.

“The outcome may not be immediate; some law firms may opt to make incremental improvements to the ‘traditional way of doing things’ in the hopes of staving off the inevitable. But sooner or later, the market will prevail.”

James Jones, a senior fellow at Georgetown and the report’s lead author, said: “We should stop referring to innovative services or delivery models such as alternative fee arrangements and alternative legal service providers as ‘alternatives’.

“They are increasingly becoming the norms in replacing prior ways of providing legal services. Clients are rapidly driving all legal service providers, not just law firms, into a new model that is more collaborative and multi-disciplinary, built around integrated technology platforms and delivered with value-based pricing.”

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