INSIGHT: Law Firms Must Innovate to Keep Up With Alternative Service Providers

INSIGHT: Law Firms Must Innovate to Keep Up With Alternative Service Providers

A growing wave of legal process outsourcing companies and alternative service providers is disrupting the legal industry by offering unique delivery models, specialized services, digital capabilities, and cost-effective pricing structures. Major, Lindsey & Africa’s Elizabeth Smith and Roger Garceau offer advice for law firms on how to effectively navigate today’s legal services revolution.

Before 2009, AmLaw 100 or 200 law firms’ hourly rates were inconsequential if the firms simply “won” for their clients. Large law firms capitalized and traded on stellar reputations, a stable of Ivy League-credentialed attorneys, and track records of success.

However, in part due to the last recession, corporate in-house teams have become more strategic and economically efficient in their approach to legal issues and no longer “triage” all issues to their law firms.

As corporate in-house clients streamline their own internal workflows, legal officers are conducting much of the “business of law” in-house and are very thoughtful about which law firms get which type of work. Today’s general counsel expect and demand faster, more technology-focused legal solutions that provide automation and cost savings.

As law firms work to find their bearings in the gig economy, there is a growing wave of legal process outsourcing companies (LPOs) and alternative service providers capitalizing on changing client expectations and needs.

These providers are disrupting the industry by offering unique delivery models, specialized services, digital capabilities, and cost-effective pricing structures. As a result, law firms must develop dynamic capabilities to avoid loss of market share.

How Can Law Firms Avoid Getting Left Behind in the Legal Services Revolution?

The conventional attorney-client engagement model is moving toward extinction. In-house clients increasingly seek innovation-minded thought partners to intelligently navigate complex legal challenges, save money, and make smarter, more strategic business decisions.

The level of innovation a law firm offers its clients is bound only by its creativity, IT capabilities, and understanding of the tools available. Here are some suggestions to consider to add value to a firm’s offerings.

Advice on business operations. Legal issues are not isolated problems; they impact the entire organization. Today’s clients expect their lawyers to possess holistic expertise that goes beyond the field of law and be able to advise them on current and potential business challenges spanning all of their operations. This requires solid business acumen as well as an intimate understanding of the client’s industry.

Customized solutions. While a client in the past would provide a road map as to how they wanted a case handled, they are now asking law firms to provide solutions that are thoughtful, creative, and financially efficient. For example, some firms are providing additional, differentiating value to their clients by:

• Serving as the design architects for cases, creating not only budgets but also litigation plans, efficiency analyses, and intelligence on various court districts. Some even assist their clients with the selection of a review tool or contracts management tool based on their experiences.
• Partnering with in-house legal operations professionals or offering technical expertise to create streamlined workflows, if a client lacks a legal operations team.
• Strategizing with a client regarding requests for inquiry/discovery related to federal and local government agencies.
• Creating novel alternative work arrangements to get a specific job done.
• Assisting in-house counsel with the creation and implementation of diversity and inclusion (D&I) programs.

Unbundled legal services. Law firms offering a la carte services certainly bucks tradition—but innovative lawyers are flexible. A key component of this flexibility is allowing clients to opt in for the specific services they need (e.g., contract preparation, temporary attorneys for novel issues), and to opt out for those they do not need. This is an attractive option to clients who cannot afford end-to-end legal services or who handle specific aspects of legal matters internally.

On-Shoring/Right Shoring. Recognizing the financial efficiencies and 24/7 response times of LPOs like Cobra and its competitors in India, law firms are wise to move their discovery and due diligence operations to smaller U.S. cities where labor and real estate are considerably more attractive.

Project management. Legal project management is quickly becoming a high-value add for outside counsel and can help a firm work more efficiently and bolster client satisfaction. There are a variety of software tools (e.g., Trello, Asana, Slack, Microsoft Teams) that can improve coordination and collaboration among virtual teams and allow team members to easily prioritize and manage tasks within a project.

Client engagement apps. Today’s clients want to be able to access their case or litigation information in real-time, anytime, from wherever they are. Providing interactive, self-serve portals and real-time dashboards can help eliminate unnecessary meetings and reduce the burden on a firm’s attorneys and staff. Clients will appreciate being able to continuously monitor the progress of their cases and access the information they need without delay.

Big Data/Artificial Intelligence. AI technologies can be used to perform legal research and discovery, eliminating significant billable hours for future-minded firms. They can be used to forecast legal outcomes and help lawyers understand the odds of winning certain cases, and quickly review contracts and other documents to identify errors. By harnessing the immense volumes of legal data available inside their own firms and via external resources, firms can keep their attorneys focused on core legal work and make better day-to-day decisions on behalf of their clients.

“Law firms today offer clients a range of value-added activities, but it is important to understand which ones your clients really appreciate—and which ones are a waste,” says Dr. Silvia Hodges Silverstein, CEO of the legal procurement trade organization Buying Legal Council. According to the council’s research, clients (in particular professional buyers of legal services) favor hotlines or access to experts for quick questions. “Not having the (billable hour) clock ticking for every quick email or phone call clearly endears law firms to clients.”

Also very popular are the conducting of pre-matter planning sessions, as clients increasingly focus on better managing legal work. In today’s legal landscape, the feverish pace of digital transformation is making innovation even more imperative. Partnering with consulting, recruiting, and advisory firms to explore alternative solutions will shed new light on options that can help optimize workflow, address skill gaps, and reduce legal costs.

A forward-thinking law firm will not shy away from innovation; instead, it will be embraced as a powerful vehicle for growth. This is an opportunity for a law firm to reinvent its legal services and build a competitive advantage by meeting client needs in a whole new way.