The relationship between large law firms and general counsel (GCs) is likely to evolve in three phases, with the “endgame” around five years away, Professor Richard Susskind has predicted.
One of the leading thinkers of the future of the law also expects the large accountancy firms to return to the arena, driving change along with legal process outsourcers and alternative business structures “fuelled by private equity”.
In an afterword to a report on GCs by Professor Mari Sako of Saïd Business School in Oxford – which found some considering a radical move to legal services “production lines” – Professor Susskind said we are currently in the first stage of the evolution, in which most law firms and GCs will seek to maintain the status quo.
“GCs will resist fundamental change of their own departments and try to meet the ‘more for less’ challenge by inviting law firms to charge much less. In turn, law firms will be similarly reluctant to change radically and so will propose alternative fee arrangements.”
However, these deals will not provide GCs with the savings they need, meaning the second phase – from about 2013 to 2016 – will involve GCs “dramatically” re-engineering their legal functions, while “law firms will move from pricing differently to working differently”.
He continued: “Both will embrace legal process outsourcing, off-shoring, de-lawyering and agency lawyers.”
But the academic said the endgame will not be about labour arbitrage: “I predict that the third phase, from 2016 onwards, will involve great uptake of information technology across the profession, such as automated production of documents and intelligent e-discovery systems – these are applications that will be staggeringly less costly than even the lowest-paid lawyers.”
Professor Susskind highlighted four main strategies GCs could embrace – driving down law firms’ prices, reshaping the in-house department, combining the two, or starting with a blank sheet of paper and undertaking a comprehensive legal needs analysis for the business. “Once these requirements have been identified, the task then is, dispassionately, to identify how best to resource the full set of needs, drawing not just on conventional lawyers but on the new legal providers too.”
Describing this last option as the most ambitious, he said it will “deliver the most cost-effective and responsive legal services for large businesses in the future”. It ties in with his vision of “legal process analysis” and multi-sourcing, where the legal requirements of an individual matter or a whole business are analysed to determine the most efficient way of sourcing each element of it.
Professor Susskind said the history of industry and commerce indicated that it should be the service provider who drives changes, rather than the client.
Law firms have generally always been reluctant to change, he wrote. “But, of course, the providers in the legal market are no longer just the law firms. As this report shows, there are new players in the legal game, not least the legal process outsourcers. I believe we will also see the resurgence into the legal sector of the large accounting firms, as well as alternative business structures fuelled by private equity.
“These providers tend to have much greater appetite for rethinking legal services than conventional law firms. The competition is stiffening. In the end, then, the agents of change may not be lawyers.”