The legal services industry continues to shift as both in-house and outside counsel grapple with perplexing issues involving efficient and effective delivery of legal services.
These issues are leading to a changing landscape that affects the division and distribution of work, competition among big, smaller and regional firms, as well as the performance of legal-related tasks by non-lawyers. All of this is likely to have a significant impact on legal service operating models for many years to come. Here are three areas to watch in 2014.
New legal market players and innovators
There will be new market disrupters that begin to change the fundamental nature of legal service delivery. These firms will not just focus on lowering the cost of legal services, but will try to reinvent the model altogether. In 2014, there will be continued experimentation in developing new platforms for delivering legal services that will allow lawyers to focus on high level advisory work rather than mundane work.
Technology takes center stage
First, technology will continue to play a pivotal role in leveling the playing field among law firms. With technology, a smaller firm can produce the same work as a large firm. Further, because smaller firms can be more nimble, they can adopt new technologies faster than their big firm competitors, which can give them a clear advantage. Secondly, technology will continue to accelerate the commoditization of legal services, which some feel will degrade the value of legal counsel. In some circles, technology may even be resisted because it challenges the way law firms and in-house lawyers define their significance. As a result, in-house leaders will have to embrace and insist on technology as part of their operations.
Outsourcing trend continues
Some legal work has been commoditized or standardized and need not be done by lawyers at all. As a result, this work is being transferred away from law firms to legal process outsourcing (LPO) providers and alternative vendors. LPO providers offer a systematic approach and cost reduction. They rely on industrial disciplines that include process improvement, metrics, service level agreements (SLA), formal governance plans, and lower cost labor.
The LPO industry has evolved significantly since its inception. Today, outsourcing isn't synonymous with offshoring. There are many options including near-shoring and blended shoring. Another emerging trend is to provide onsite, non-employee staffing. Unlike hiring a temp, bringing LPO support in-house is typically a longer term arrangement that allows an organization to benefit from highly skilled technical specialists without adding headcount and without large investments in training. With so many options to suit the needs of in-house or outside counsel, LPO will continue to shape the legal industry in the coming years.
However, as the trend continues, LPOs will face more competition, especially from staffing firms, discovery vendors and law firms with their own in-house versions of outsourcing centers. Questions regarding the relationship between the law firm, its client and an LPO will be a focus in 2014.