Traditional commercial law firms are “on their death bed” and must change their business models to survive, the general counsel of three leading tech companies have warned.
However, one of them, James Sullivan, vice-president of legal at digital bank Monzo, said there was hope, talking about a visit he received this week from a law firm that offered both non-legal services and an AI-based contract review tool.
Gordon Youngson, head of legal for Europe at global payments service Transferwise, said traditional law firms suffered from “inertia” and were still “stacking meetings with lawyers” when all that was needed was a phone call.
“Unless Big Law adapts to the way agile providers are doing things, they’re on their death bed. They need to change their model.”
Speaking at a roundtable event on the changing legal services market organised by lawyer-matching service Lexoo, Mr Youngson estimated that it would take 10-15 years for “old school law” to die.
Mr Sullivan said: “It’s very hard for legacy businesses like law firms to move to a different model. That would take a generation to do.
“Partners are incentivised to keep the status quo. I just don’t think it will happen.”
He said there was “an increasing focus on cost efficiency” and alternative providers could be one of the “levers” for tech companies to limit the growth in their spending on legal services as their businesses expanded.
Mr Sullivan said he was “quite blown away” by the partner who visited him this week, offering a range of non-legal and legal services and an AI contract review tool.
Mr Sullivan said he would be asking for a demo of the tool, which did not replace lawyers, but allowed them to do a “fast scan” of agreements.
Tom Hambrett, head of legal at digital bank Revolut, said a lawyer friend had complained that there was “just no-one” at the level of senior associate any more.
“The reason is because law firm partners can rely on one or two senior associates and just churn junior lawyers. That’s what keeps the partners afloat.
“We need to change that because senior associates get really burnt out.”
However, Mr Hambrett said it could be difficult persuading associates to work in the tech sector “for a company which might not be there in the future”, and to take a pay cut.
Daniel van Binsbergen, chief executive of Lexoo, said it would have been difficult to start the firm 15 years ago, because the “quality of supply” of external lawyers “just wasn’t there”.
Mr van Binsbergen said lawyers were now “OK with the idea of not being a partner in a large firm” and it was no longer seen “as a mark against you”.
The discussion also considered ethical dilemmas facing in-house lawyers in the tech sector. Mr Youngson said they were a challenge irrespective of the employer.
“We have to hold the line – it’s just something we have to do. Obviously it helps if we have the support of the board and the management. It’s a daily challenge.”
Mr Sullivan said: “If you’re a good lawyer, you should have the ability to say no. You should have the ‘no card’ and if you use it rarely, then there is a chance people will understand it means no. We absolutely do and will say no.”
He added: “When you’re advising on something that’s never been done before in a very short time window and you say no, you’ve got to have a pretty good reason.
“Sometimes there is no right or wrong answer, but you have to be the bastion of morality for the business. That’s our role.”
Mr Hambrett said in-house lawyers were increasingly being drawn into the ethical side of more general business management decisions.
“You do have to say no, and you sometimes have to be creative with the decisions why because it may not be something couched in law.
“There’s often no policy on it because it’s an ethical decision. Although it’s painful at times, it’s comforting in a way because if you take it on, you help steer a business through tricky questions and help their customers.”