Legal Services – a Brave New World
Although it is to be hoped that the more sinister themes from Aldous Huxley’s dystopian classic remain mercifully absent from the rapidly evolving legal services landscape, it is unquestionably the case that the world of legal services provision has faced a troubled rebirth, throwing up new opportunities for some and difficult challenges for others. All stakeholders must evolve or risk falling by the wayside.
Change is being driven by a number of factors, which can loosely be categorised as follows; structural, regulatory and cultural. The traditional model of supplying legal services is based around the pyramidal structure of a solicitors’ firm, consisting mainly of permanent staff, offering a range of legal ‘products’ depending on market focus and individual specialisation. In addition, firms may use barristers (counsel) on a referral basis to represent clients in court or offer opinion on specialist subjects.
For centuries this model has formed a ‘closed loop’ between lay client, solicitor and counsel which has severely restricted the ability of additional service providers to become involved in the provision of legal services of any kind. Until now.
The change really began, at least to my mind, with the relaxing of the Public Access Rules by the Bar Standards Board (BSB) in 2004. Until that point, a lay client (member of the public) could only gain access to the services of a barrister via a solicitor, who would take instruction from the lay client and subsequently instruct a barrister. The relaxing of this rule which enabled members of the public to go directly to a barrister with their legal problems, thus saving a considerable amount of money and retaining greater control of the case itself, marked the beginning of a shift in attitude in the profession which vested more power and control in the lay client themselves. The loop was broken.This trend has continued as technological advances have given rise to cloud based data and flexible working arrangements. This has reduced the need for permanent staff based in expensive City offices and produced the ‘contract lawyer’ and a project based approach to legal work, where firms ramp resource up and down as required in order to undertake projects of finite duration. Senior figures in a number of firms that I have spoken to recently talk of the traditional pyramid structured law firm being ‘dead’ as the economic case for maintaining this approach rapidly dwindles.
Change has also been driven by the introduction of a new legal ‘vehicle’ in the shape of the Alternative Business Structure (ABS), which for the first time has allowed non-law firms to offer legal services. The potential of this vehicle to unlock the lucrative legal market has not been lost on the ‘Big 4’ professional services firms, who have all created their own ABSs and are aggressively moving into the field, driving cultural change both at client and practitioner levels.
This ‘commercialisation’ of the market is being undertaken in different ways by firm; EY has made acquisitions of fully fledged flexible legal providers (Riverview Law, Thomson Reuters/Pangea 3), whereas Deloitte and KPMG have decided to develop their own products internally. What is clear however is that the barriers have come down, and there is an appetite, particularly for those firms with scalability and infrastructure, to muscle in on a previously impenetrable market, introducing new working practices and technologies to streamline what has previously been a fairly archaic and reactionary profession.
Why are these changes relevant to us at Momenta?
These changes are extremely relevant to us in a number of ways, First and foremost, Momenta is a people business, supplying high quality workers to organisations to enable them to undertake work which would otherwise be beyond their scope. As the legal labour market deregulates and becomes more accessible, clearly more opportunities will present themselves for us to become involved.
In addition, as the lines between professional services firms and their suppliers blur, we become part of the puzzle when clients require an end to end solution to their problems. The recent changes allow us to seamlessly fit in as a supplier of a variety of services, working with other companies to construct fully outsourced service solutions in the legal market in a way that would have been impossible just a few years ago.
Further, we have been able to leverage our size and scalability, combined with our process expertise and technology partnerships to establish ourselves as a new breed of commercial collaborator. Our suite of business support propositions combined with our access to technology and litigation funding manes that we can partner with firms to enable them to act as large scale operations, without incurring the costs and liabilities associated with organically growing a firm over time. By remaining flexible and watching the market evolve we have established ourselves as a pioneer in the new legal services landscape.
What do I predict happening in the future?
More of the same.
In my opinion there will always be a place for expert advice, centred around a smaller number of smaller and more specialised firms, combined with the traditional barrister referral role but the monopoly on the provision of services generally is over; the genie is out of the bottle. The legal services landscape will follow the trends seen in other areas; flexibility will be key, both in terms of working practices and service offering. Those companies that embrace change and work together will thrive on a raft of new opportunities; those that fail to evolve will struggle.