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In our first #ThinkTank, we asked a panel of our world-class Faculty to share their uniquely valuable insights on the State of the Legal Industry. In this case, we asked them to share their wildest prediction for the state of the legal industry through year end 2020. The richness and diversity of their thinking makes for timely, compelling reading. We hope you enjoy it.
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#WildCard: What is your wildest prediction for the state of the legal industry through year end 2020? Don’t be shy.
Data is everywhere! One of the most surprising things that will become more evident by 2020 is how ubiquitous the challenge of data privacy will be in legal cases worldwide. We are already seeing data privacy concerns being raised in antitrust matters in Europe, the US Federal Trade Commission is exploring the promises that tech companies are making to consumers about data privacy, we have the Internet of Things (IoT), we have digitally connected Smart Homes, we have Autonomous Vehicles and we even have countries who require electronic geo-fencing. This data will create a sea of new data privacy issues that will affect legal matters. There will soon be an obligatory data privacy “lens” needed in the consideration of most legal cases in the not so distant future.
I think that the elite firms will aggressively invest in technology and innovation to counter the Big Four’s bold moves. Even the largest firms need to lower the unit cost of delivery to maintain a sustainable amount of contribution-margin work that gives them the freedom to work on large complex matters and embrace high risk, high reward alternative fee arrangements, particularly in litigation. At the same time, the Big Four are going to continue to buy LPOs and legal technology companies. EY’s purchase of Pangea was just a precursor to a major campaign by the Big Four to take work from law firms. At the same time, the business model for the new breed of “Enterprise Legal Services” providers will be tested. We will know if the outsourcing, rebadging theory of delivery has an extended runway amid the aggressive investment strategies from Big Law and the Big Four.
If we think of wild predictions as what we hope to happen, I would make a prediction less on the profession and more on the education of lawyers. I would hope that in the next three years, we have an honest conversation about how students are trained to become lawyers. This will take difficult conversations and widespread change management because it will upend some of the ideas of a traditional legal education.
However, we need to adapt our legal education system to reflect the rapidly changing dynamics of the profession. Yes, we will still teach students about contracts, torts, property, procedure, and all the classic and necessary aspects of a legal education. However, we should supplement the traditional legal curriculum of law schools to better reflect the needs of clients, as well as 21st century technology and skillsets. That includes incorporating more business classes. It includes project management, operations, lean processes, design thinking, data analytics, technology, and many other subjects that will help them bring more value to clients. These missing skillsets are necessary and warranted from the future solo practitioner to Big Law attorney and the future government attorney to corporate counsel. These are broadly applicable skillsets.
A look at current legal hiring trends should be the canary in the coal mine. Projections on how we will practice law in the near future should be the guiding road map. While we won’t see all of these in curricula by the end of 2020, we should start the conversation by then, or as soon as possible.
As new competitive forces in the legal industry continue to emerge, law firms are faced with strategic choices around where and how they will compete. Trends such as the rise of in-house operations teams and related industry groups, the growth of ALSPs, increasing investment in legal on the part of the Big 4, and new legal software being developed at a record pace; are driving the attention towards how firms can, and will continue to, differentiate going forward. I expect that we’ll continue to see law firms investing more heavily in resources outside of the legal industry, looking to bring new ideas and perspectives into their strategic planning and positioning. However, a somewhat wild prediction is that law firms will start to acquire software companies, but the rationale for the acquisitions will be driven less on the underlying technology platforms, and more on the need for the creative talent and mindset present in startup software businesses, as a way to inject a growth and innovation culture en masse into an environment that traditionally has resisted innovation. While Chief Innovation Officers will likely continue to be hired, lone voices trying to drive change in change-resistant cultures will face significant adoption headwinds. It will take an infusion of like-minded change agents to create the momentum firms need to truly redefine their service delivery models; and I expect those change agents to come from the rich talent pool of young, creative, scrappy, entrepreneurial software developers who have yet to fully turn their eyes to the plentiful use cases the legal industry affords. It’s not going to be about the tech, it’s all about the talent.
In my opinion, the strength of the U.S. government is currently being tested. Lawyers are playing a vital role in defending our democracy. I predict that their efforts will be successful and that they will inspire renewed interest in law as a career.
The legal profession has survived hundreds of years. It will survive more. What’s my wildcard? Nothing will change our profession. It’s our profession that needs to adapt to the digitalization of our economy and the way business people think and react to new information in our new economy.
Referring to the access to justice issue I mentioned above, I am confident that we’re going to see great strides in technology, especially in the AI space. While we don’t yet see it as commonplace in the foundational legal tools that legal departments are implementing, we are starting to see the service providers employing AI, such as law firms and alternative legal service providers (ALSPs). In addition, we’ll begin to see the liberalization of legal services. It won’t happen this year, and maybe not even next, but with the Big 4 clearly moving into this space and alternative service providers only gaining marketshare, I am confident the rules are going to change, just like they did for AirBnB, Uber and medical marijuana – all whose models were illegal when they began, but the rules changed to meet the demand.
Molly L. Pease
I predict that by the end of 2020, non-traditional legal service providers, such as the “Big Four” accounting firms and other atypical lawyer businesses, will double their share of the legal services market and force law firms to rethink how to work efficiently and provide better value to clients. The Big Four are better positioned to invest in technology and have proven systems for tracking and monitoring large scale projects that can be easily translated to the legal context. This will likely cause clients to expect better transparency from law firms into what exactly they are paying for and whether a more efficient and cost-effective alternative is available. The law firms that cannot adjust may go the way of the Dewey & LeBoeufs of the world.
In the year to come, I predict more companies will set affirmative litigation recovery targets and institute affirmative recovery programs. With so much data suggesting the tremendous value that exists in meritorious, affirmative legal assets, it seems logical that smart companies and savvy legal departments will begin to unlock that value in a programmatic way. Ignoring the “Picassos in the Attic” simply isn’t tenable in an increasingly competitive market. One need not look any further than Dupont, which generated over $1 billion from its recovery program, to envision the road ahead where in-house legal departments endeavor to have a similar impact.
We are going to see more disputes and litigation related to the cyber security and data privacy challenges that have been accumulating over the past few years. There will be heightened scrutiny of who did what and when and the key factor of whether it was reasonable. Parties will allege implied or agreed-upon security measures failed in some way to keep data secure or some other standard of care was not met. It will be increasingly complex for attorneys to locate and sort through the relevant security standards and practices, and competent expert assistance will be essential.
A major security breach will be disclosed of a cloud-based document review platform. This will be the impetus for multiple industry groups to develop competing security standards. Corporate clients will require law firms and service providers to conform to their chosen standard causing widespread disruption as law firms scramble to upgrade their IT security systems and enforce user protocols. Lawyers’ notoriously high rate of non-compliance with security requirements will affect the bottom line.
- Corporate counsel can handle most work themselves, internally or through outsourcing.
- So they will hire only law firms at the top range that not only get complicated work done, but also provide an insurance policy, through their brand name, for the corporate counsel.
I have two.
First, I think that legal service providers will find themselves losing clients on the basis of “how they are delivering the service” and “how hip they are with the use of technology.”
Second, and this one is not just for the legal industry, I won’t be surprised that in 30 years or less it will be a crime to be in possession of physical paper. I think the environmental conditions and risks will be responsible for that.
The Legal Industry doesn’t really lend itself to wild predictions, especially with a two-year horizon. Some of the industry transformation that we are seeing outside the US, whether it be from competition from the Big Four or non-lawyers holding equity in law firms is unlikely to accelerate in a transformative way in the near term. Firms and in-house groups will continue to accelerate their use of capital and technology in order to differentiate themselves and better serve their clients.
All Computers … no people
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