September 26, 2024

Consulting best practices legal innovation law firm

This post a month ago explained why law firms are likely, sooner rather than later, to face an industry-redefining ‘Sling Shot’ moment of disruption spurred by the combination of corporate demands and unprecedented innovation. This post delves further into what’s driving this coming inflection point and what will determine the fate of law firms in the new legal world order that the Sling Shot precipitates.

Drivers and Timing

The change will be mainly driven by General Counsel, who are evolving to transform their law departments from service-oriented cost centers into entities that better enable business outcomes and create value. The growing need to ‘run legal like a business’ is driving law department leaders to demand more from their outside counsel than just legal acumen. In particular, they want their law firms to help them

• uncover and apply legal insights that impact their company strategy and ability to operate
• improve cycle times and other metrics relating to customer experience
• contribute to business growth but without a corresponding rise in legal costs

A law firm partner may look at these points and see nothing new, but what will be different after the Sling Shot is that clients will have more options – viable, cost-effective, software-powered alternatives that fulfil these needs and enable them to break with the traditional law firm offer.

We have seen incremental change accelerate into step change in recent years, most apparently through the boom in tech and the arrival of Generative AI. But what might trigger the Sling Shot and precipitate an abnormally disruptive moment? If history is any guide, a massive, industry-disrupting moment will arrive in the wake of one of the following:

• another financial crisis (God forbid!)
• the ‘uberisation’ of law, which would see a flattening of the connection and accessibility between supply and demand for legal services
• the ‘robotisation’ of law through more EvenUp– or DoNotPay-esque software that enables vast volumes of matters to be managed by far fewer lawyers. This will require law firms to fight tech with tech rather than people.

Will this mean that demand for law firms’ services will decrease?

We think not. In fact, we believe that overall demand will grow. But it will look different. We also believe that it is more a case of ‘when,’ not ‘if,’ one of these tipping point scenarios materialises, and that only the firms that are prepared will emerge as winners.

Which Firms Will Prevail? 

Surviving and thriving in a post-Sling Shot environment starts with focusing on what general counsels value most and understanding they seek to address both the business of law as well as the practice of law. This is particularly true regarding work that is ‘low stakes’, high volume, and routine. This type of work does not fit the traditional paradigm of the lawyer as an expert adviser, nor the often-unconscious link lawyers make between the complexity of legal work and its value. However, there is considerable value to the GC in being able to better manage such work, freeing up her legal team to focus on more complex or business strategic matters. High volume, recurring, and routine work is eminently suited to technology-driven efficiencies and, therefore, has the potential to be highly efficient and profitable. Law firms that recognise this and proactively create solutions to tackle this work stand to gain significant advantage and improvement to profit per partner (PPP).

Law firms that apply that same thinking to their internal operations will also be better prepared for any existential threats or disruption. Farsighted firms are already developing captive, ‘adjacent’ or ‘law-company-like’ services. This may include building tech-enabled legal shared services for high-volume work and investing in innovation or law company partnerships to drive profitability and growth.

How to achieve the transformation

Successfully navigating the imminent transformation in law will require an approach that is both tactical and cultural.

The former means exploiting opportunities to do things differently by making operational changes along the lines described above. The latter requires a shift in mindset and behaviour that is equally important and potentially more challenging to realise. This includes

• Focusing on solving over-arching business goals rather than the narrow legal problems presented
• Seeing everything through the lens of value to the customer
• Building and delivering adjacent capabilities to adequately address ‘run and grow the business’ in addition to the traditional protect the business
• Going beyond the ‘T-shaped lawyer’ to the T-shaped teams
• Establishing a culture of innovation that enables individuals to experiment and fearlessly deploy technology to assist in the delivery of legal services

Finally – while much of the disruption we anticipate is technology-driven, one thing that won’t change is that people will still be a law firm’s most important lead and asset. Adding services adjacent to conventional legal services will not only drive more revenue and profit at scale but also markedly expand the scope of activities and development opportunities for employees. Law firm leaders will need to think imaginatively about how to leverage this to attract and retain talent. They will need to provide career paths that look different from the limited options offered by most law firms today and reinvent their talent proposition for the next generation.

The clock is ticking for law firms to ‘disruption-proof’ themselves in advance of ‘Sling Shot’ step change that is certain to arrive. What firms do – or don’t do – now will determine their fate.