The COVID-19 pandemic has wrought unforeseen changes on many fronts, and law firms will never be the same. During the pandemic, firms have been learning important lessons about how to accommodate—and even thrive with—virtual work, how to reevaluate their legal service delivery and real estate footprint, and how to reallocate tasks to maximize their efficiency.
Traditionally, the legal industry has been reluctant to implement change; after all, lawyers adhere to a case law system built on hundreds of years of case precedent. To say that the industry has been plagued by change gridlock is an understatement.
“Wherever there is change, and wherever there is uncertainty, there is opportunity!”– Mark Cuban
As we face the prospect of an economic downturn, firms are looking at ways to best position themselves. A centralized, clear vendor governance strategy that aligns with the firm’s strategic direction can aid in responding to economic turbulence. Vendor governance can help a firm readily identify operational costs for reduction, minimizing the impact on profits, and sustain those cost savings during an economic downturn.
The 2019 HBR Consulting Law Department Survey found that corporate law departments are shifting their focus to adopting innovative legal service delivery practices, such as the increased use of other service providers, including alternative legal service providers (ALSPs). For those who use those, spending increased by 11% in 2019.
HBR was recently privileged to co-sponsor ARK’s second annual Law Firm Innovation Summit. The event welcomed 120 attendees, spanning a range of job titles including formal innovation titles, KM, IT, client value and development, COOs, marketing, pricing and legal project management, talent, educators, data analytics, sales and, of course, attorneys. This broad range of expertise provided a rich array of perspectives, making for fascinating presentations and conversations.
Reflecting on those interactions, I wanted to share a few of my and my colleagues’ takeaways:
It is an increasingly competitive market for law firms. Law departments are bringing more work in house, continuing to consolidate the number of outside firms they use, and sending more work to alternative legal service providers. To differentiate themselves, law firms of all sizes are seeking strategies to provide increased value to their clients, while simultaneously increasing profitability.
Although the predicted time frame varies, most business economists suggest that a recession is on the horizon within the next two years, according to a survey by the National Association for Business Economics released in late February. At the end of the year, many CFOs were predicting recession in the U.S. by the end of this year, and The World Bank lowered its projections for global growth in its ominously titled January report, “Darkening Skies.” We cannot predict when or whether a downturn will occur, but we know from experience that those who maximize their operational efficiency are better prepared to succeed, regardless of the economic situation.
The Summit on Legal Innovation and Disruption (SOLID) held in London on November 7 provided a view into the rate of transformation, primarily from the lens of the UK and Europe. The action-packed, daylong event included 15 TED-style talks and “fireside chats” (sans the fire), along with brainstorming sessions among the participants. SOLID London 2018 was produced by The Cowen Group in association with Baker McKenzie. HBR Consulting was one of several partnership sponsors. The aim of each Summit is to gather legal professionals for an exchange of ideas about the intersection of innovation, advanced technology and the business of law. Most of the attendees and speakers at the London forum were EMEA-based corporate counsel, providing a unique view into innovation in law departments outside the United States.
Back in the day, law firms and clients usually set forth the terms governing their relationships in standard engagement letters. But more recently, as bargaining power has shifted away from law firms and toward clients, organizations have begun to document their expectations for outside counsel in increasingly long and detailed guidelines.