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How to build new pillars of the law firm

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Anders Spile.

Looking back at the past 50 years, life as a lawyer has been fairly stable and good. The legal profession has served as a foundation for all societies around the world, and legal services are in demand both during recessions and economic booms, which has secured legal professionals some incredible salaries.

Because of consistent demand, life as a lawyer has not changed much compared to other professions where the emergence of digital technologies has caused radical changes. Even to this day, there seems to be enough work to run a successful business and practice law in the same way it has always been done.

However, for newly minted lawyers, the dream of practicing the same way previous generations did is becoming less and less realistic. The legal profession has never experienced as much pressure as we are seeing today.

And each lawyer must consider how to approach a future in the profession where they have to compete, not only with smarter technologies, but also with new competitors in the market. Will future lawyers be able to focus on law alone? Is this single foundational pillar of a law firm still sufficient to compete?

The hype concerning the disruptive factors in the legal industry is real, and a considerable amount of legal tech companies have been able to live off this buzz for several years now. Novel terms like “captive alternative legal service providers,” “legal project management” and “alternative fee arrangements” are all gaining a hold in the industry. As modern as they may seem, they have been an integral part of most other professional industries for years.

Sustaining growth

Lawyers are just now feeling the pressure to introduce what is regarded by most clients as common sense. However, even law firms that decide to offer their legal services in these formats are solely focusing on a single pillar: law.

Professional services as a whole are changing, and merely looking for new service delivery metrics may not be the leap needed to maintain a competitive advantage in the future. In a report published by Bain & Company, a central prediction for the future of running a business is the notion, “Whatever can be outsourced, will be outsourced.” This is not only a prediction, but a fact of what many businesses are experiencing today. Recruitment, accounting, consulting, IT and law are all supportive functions that most businesses consider outsourcing for a number of reasons.

While law firms have chosen to focus solely on law as their foundational pillar, accounting firms everywhere in the world have decided to offer several types of professional services in one-stop-shop concepts. These include management consulting, IT, security, R&D, as well as accounting. While law firms have one foundational pillar, competitors now have several. These pose two fundamental questions: Will law firms be able to sustain their growth? And what will happen when the legislative protection guarding the practice they enjoy is revoked?  

When considering law firms’ existential crisis in real-life scenarios, firms must ask themselves this question: If one of the Big Four accounting firms—Deloitte, EY, KPMG and PwC—handle IT, R&D and data security for a client, will you then get to do casework related to technology? And if a consulting house delivers management consulting, accounting and economic analysis, will you then be doing the legal due diligence when they acquire another company? Many law firms are concerned with going “up-market,” but they forget that their competitive advantage is first and foremost their legislative protection, secondly their brand, and the Big Four knows this.

Changing strategy

In a recent article published in Legal Tech Weekly, leaders of the legal departments, in the Big Four’s Scandinavian branches, explain their view on these particular scenarios. They say clients are trusting them with increasingly complicated legal matters, and that these same clients are expressing gratitude for having a one-stop-shop for anything related to professional services.

Some senior partners have probably come to terms with the fact that they will be able to sustain their earnings in the coming five to 10 years by actively working against innovation in general, opposing intra-firm investments focused on technology and innovation. After all, a few percent out of the equity pot means less money to take home by the end of the year. This, however, does not change the fact that unless the law firms do something besides “business-as-usual,” they might be slowly approaching oblivion.

To a majority of law firms, the journey from traditional law firm to a professional services company seems unmanageable. But this change of strategy could be divided into smaller,  individual paths, each with their own outcome and value to the firm. One example could be the implementation of a legal project management framework in a specific practice area, offering alternative fee arrangements for a particular service or looking into training your lawyers to be legal business consultants. There are several proven use cases, especially for those seeking to be “smart second movers.”

Implementing smaller innovations and succeeding will also help rally a company to embrace change. This is paramount to making bigger change happen, and essentially looking toward the expansion of fundamental pillars in the law firm. This development can happen from within the law firm, starting with a small team offering new services with little-to-no relevance to law. However, it might be advantageous to look at other more aggressive approaches. Formal partnerships or even mergers with other providers within the professional services industry could be a solid option—if law firm regulations allow it.

This would increase the number of foundational pillars offered by the law firm, not to mention the synergies that cross-service collaboration offers if leveraged properly. The value of cross-service offerings is only starting to emerge, and early adopters will no doubt reap the benefits of being first movers when larger clients realize how much value can actually be obtained from these new types of one-stop-shop services.

Law firms need to address the changes happening right now. While most medium-sized firms seem to believe that it is enough to appoint a young lawyer with an interest in tech as head of innovation, this often proves insufficient. You need plenty of education and experience to become a lawyer, but you need even more to have what it takes to innovate a change-resistant, conservative and poorly governed firm that is making too much money at the partner level to really care for the future.

There is no doubt that the future of professional services belongs to the bold and adventurous. Those who dare to tread undiscovered paths and to deliver new valuable solutions to clients will succeed. In order to offer these novel products, law firms must broaden their search beyond the single foundational pillar of law. They must start looking at what could be created in the chasm between other professional services.

Only then will law firms be able to sustain a competitive advantage in the professional services industry of the future. Only then will law firms avoid ending up as isolated ancient pillars in the ruins of the Roman Forum, carrying nothing but dust.

Anders Spile is a legal tech and innovation consultant who helps law firms develop and implement strategies based on open innovation principles. Spile has previously worked in large international foundations and law firms and has several years of experience in Chinese and Asian markets. Based in Copenhagen and working in Contractbook, a leading Scandinavian legal tech provider, Spile has hands-on experience as to what it takes to test, select and implement legal tech solutions in larger law firms. To have a talk about legal tech and innovation, Spile can be contacted at [email protected] or through LinkedIn. is accepting queries for original, thoughtful, nonpromotional articles and commentary by unpaid contributors to run in the Your Voice section. Details and submission guidelines are posted at “Your Submissions, Your Voice.”

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