IT: the great leveller
In association with Thomson Reuters: how medium-sized law firms can use legal tech to compete with the big industry players
The familiar trio of “People, Process, and Technology” play a role in every business. However, as medium-sized law firms increasingly compete for the same pool of clients with large law, it is the “Process and Technology” that are shifting, and levelling the playing field. As for “People”, there is still a dearth of amazing lawyers available since the recession, so while important, it is the least altering factor among the three.
Large law firms are currently flanked on two sides: the Big Four consulting companies from the left and medium-sized law firms to the right. Some of the largest clients are increasingly seeking full service houses. For example, PwC or KPMG can handle everything from tax, IT services, marketing, facilities, procurement, and now legal services, all under one roof. As this was written, Ernst & Young just acquired Riverview Law to expand its managed legal services business, which further emphasises this point. This shift has been expanding as the Big Four grow their legal expertise. While it is unlikely that clients utilising the consulting companies may have considered a medium-sized firm, all of the remaining clients are now fair game for both large and medium law, and here is why.
Scaling up and matching up
Simply put, technology tools are levelling the playing field. With a proliferation of legal technology instruments on the market, each attempting to nibble at the traditional business of law or practice of law, there is a load of opportunity for any agile firm to gain traction. The surge in legal tech startups is global. Led by what some consider the last bastion of massive margins in business, the legal honeypot of financial gain awaits. In a business which has traditionally been less than efficient, the startups can taste the sweetness on their fingertips and are innovating in every direction in the legal landscape. The medium-sized firms that are open to the adoption of technology will have the upper hand.
Previously, larger pools of support staff and lawyers were necessary to accomplish or finish tasks. Now, leaner numbers can be prolific producers when it comes to rote services. There are tools which can magnificently automate documents in any number of areas, including real estate, employment, M&A, trust & estates agreements. Such processes essentially allow for more scale that medium-sized law firms could not handle previously, by automating exemplar documents and turning them into intuitive questionnaires. This sort of example illustrates that any firm leveraging these types of technology can compete with nearly any other firm at some level. This was one. There are many similar examples where new tools are ushering in impressive efficiencies through a myriad legal technology tools. At the beginning of this technological shift, the tools will aid in the rote, and in the years ahead more complicated bespoke work will be enabled.
The risk ahead is for the firms that fail to innovate. Without the adoption of basic technology tools, they will not be able to compete with efficiency and turnaround for their clients. It will start gradually, but quickly impair the late or non-adopters.
Process isn’t proprietary ̶ it’s widely available
Further, levelling the playing field is a process. Once upon a time, a barn full of lawyers was necessary to review documents for complex litigation. Those days are past. Now, a medium-sized firm can call upon LPO (legal process outsourcing) to bring in 50 lawyers in 24 hours. Thus medium-sized firms can now use alternative legal service providers to ramp up instantaneously. The firm of 100 can now puff out its chest as it handles a far grander case than once was feasible with temps and staff lawyers. In addition, to magnify this, these LPOs are using increasingly efficient tools like TAR (technology assisted review) to aid in the EDRM (electronic discovery reference model) and vastly improve speed to find relevant material.
Ceteris paribus, as legal technology tools advance rapidly and process is flattened, the distinguishing factor between large and medium firms will blur. In the end, with an even playing field, the unique creative “People” vision will likely tip a client into one camp or another. Ultimately, competition among all law firms will become progressively more spirited because of technology and process.
Lucia Sandin is a senior marketer at Thomson Reuters, Legal, UK & Ireland